Karpeles goes to trial over bitcoins
The former CEO of collapsed bitcoin exchange MtGox goes to trial in Tokyo this week on charges stemming from the disappearance of hundreds of millions of dollars worth of the virtual currency.
The former CEO of collapsed bitcoin exchange MtGox heads to trial in Tokyo this week on charges stemming from the disappearance of hundreds of millions of dollars worth of the virtual currency from its digital vaults. Frenchman Mark Karpeles is facing embezzlement and data manipulation charges.
Karpeles was once the highflying head of the world’s busiest bitcoin trading platform.
He reportedly lived in an $11,000-a-month penthouse and spent money lavishly, including on prostitutes.
“He is keeping calm as the trial gets under way,” his lawyer Kiichi Iino said. Karpeles planned to plead not guilty.
The 32-year-old Karpeles was arrested in August 2015.
He was released on bail nearly a year later over allegations that he fraudulently manipulated data and pocketed millions worth of bitcoins.
MtGox, which claimed it once hosted about 80% of global bitcoin trading, closed down in 2014 after admitting that 850,000 coins — worth about $480m at the time — had disappeared from its vaults.
The company initially said there was a bug in the software underpinning bitcoins that allowed hackers to pilfer them.
Karpeles later claimed he had found about 200,000 of the lost coins in a “cold wallet” — a storage device that is not connected to other computers.
Tokyo-based MtGox filed for bankruptcy protection soon after the cyber money went missing, leaving a trail of angry investors calling for answers and denting the virtual currency’s reputation.
Karpeles, who said he was working as an information technology consultant, has commented on issues concerning bitcoin, but not on details of his criminal case.
“The charges (against Karpeles) only cover a subset of the issues which were happening at MtGox, so I don’t expect that we will find out most of the information we want to know,” said Kolin Burges, a British investor who said he had lost several hundred bitcoins in the collapse of MtGox.
“I’ve not had any back yet, but hopefully, eventually all the creditors will get a small percentage of their money back from the bankruptcy distribution,” Burges said.
Around the time of his arrest, Karpeles’ mother told Japan’s top-selling Yomiuri newspaper her son was a genius who learnt computer languages at the age of three and had started making simple programmes by the time he was five.
In 2006, Karpeles wrote on his blog that computer crime was “totally contrary to my ethical principles”. But four years later, a Paris court sentenced him in absentia to a year in prison for hacking. He had come to Japan to work for a web development company around 2009 and later became involved in the bitcoin exchange.
In the wake of the MtGox scandal, Japan passed a bill stipulating all virtual currency exchanges must be regulated by its Financial Services Agency.
Virtual currencies are generated by complex chains of interactions among a huge network of computers around the world, and are not backed by any government or central bank, unlike traditional currencies.
Bitcoin has suffered hacking incidents including one in 2016 in which a major Hong Kongbased exchange, Bitfinex, suspended trading after $65m in the virtual unit was stolen.
Bitcoin and hundreds of rival digital currencies are becoming increasingly popular.
HOPEFULLY, EVENTUALLY ALL THE CREDITORS WILL GET A SMALL PERCENTAGE OF THEIR MONEY BACK