Mt Gox bit­coin head Karpe­les faces em­bez­zle­ment charges

The Star Early Edition - - BUSINESS REPORT | INTERNATIONAL - Elaine Kurten­bach

THE HEAD of the failed Ja­pan­based bit­coin ex­change Mt Gox is due to ap­pear in Tokyo District Court to­day to face em­bez­zle­ment charges.

Author­i­ties sus­pect French­born Mark Karpe­les of ac­cess­ing the ex­change’s com­puter sys­tem in Fe­bru­ary 2013 and in­flat­ing his cash ac­count by $1 mil­lion (R13.37m).

He was ar­rested in Au­gust 2015 and re­leased on bail months later. In Oc­to­ber last year he re­sumed post­ings on his Tum­blr ac­count, and has oc­ca­sion­ally an­swered ques­tions on­line about the han­dling of the Mt Gox bank­ruptcy.

Karpe­les has de­nied wrong­do­ing. If found guilty, he could face up to five years in prison, or a fine of up to ¥500 000 (R58 670). When Mt Gox went off­line in 2014, Karpe­les said tens of thou­sands of bit­coins worth sev­eral hun­dred mil­lion dol­lars were un­ac­counted for.

Peo­ple af­fected by Mt Gox’s fail­ure are still try­ing to ob­tain funds they lost. Based on so­cial me­dia dis­cus­sions, many are still hop­ing to find out de­tails of why it col­lapsed dur­ing the trial.

Mt Gox’s fail­ure stunned the world bit­coin com­mu­nity. Crit­ics said the de­ba­cle high­lighted the risks of bit­coin trans­ac­tions, while bit­coin pro­po­nents con­tend

Peo­ple af­fected by Mt Gox’s fail­ure are still try­ing to ob­tain funds they lost.

Mt Gox is just an ex­cep­tion.

At the time of Karpe­les’ ar­rest Ja­panese author­i­ties said they were baf­fled by the Mt Gox case, be­cause they had never dealt with pos­si­ble crimes in­volv­ing bit­coins, which are not is­sued by cen­tral banks.

Even though Mt Gox was one of the big­gest dig­i­tal cur­rency ex­changes, ex­perts also said it might be dif­fi­cult to take ac­tion be­cause of the ab­sence of laws over vir­tual cur­ren­cies.

New laws

In the nearly two years since then, Ja­pan has en­acted new laws to reg­u­late bit­coins and other cryp­tocur­ren­cies, whose use has been rapidly ex­pand­ing. One of the coun­try’s big­gest elec­tron­ics re­tail­ers, Bic Cam­era, has be­gun al­low­ing bit­coin pay­ments at three of its out­lets in Tokyo.

The gov­ern­ment also has spelled out reg­u­la­tions to help pre­vent mis­use of bit­coins and other vir­tual cur­ren­cies for ter­ror­ism or other il­le­gal ac­tiv­i­ties, in­clud­ing re­quir­ing banks and other busi­nesses to ver­ify iden­ti­ties, keep records and re­port sus­pi­cious trans­ac­tions.

The reg­u­la­tions im­ple­mented in April re­quire vir­tual cur­rency traders to keep cus­tomers’ as­sets sep­a­rate from their own, partly be­cause of the losses suf­fered in the Mt Gox bank­ruptcy.

Mark Karpe­les, Mt Gox head.

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