Mark Karpeles, the former CEO of now bankrupt MT Gox, has been cleared of embezzlement, but has been found guilty of tampering with financial records.
He was given a two and a half years suspended sentence, meaning he will not spend any further time in prison unless he performs another criminal act.
That’s after he spent about a year in custody between August 2015 and July 2016 while awaiting trial.
Karpeles has maintained he is innocent. “Most people will not believe what I say. The only solution I have is to actually find the real culprits,” he previously said.
The court found no sufficient evidence of embezzlement with prosecutors failing to prove to a sufficient standard that he had used customers funds to live a luxurious lifestyle.
The court however did find him guilty of mixing his personal finances with those of the exchange. He fiddled with Mt Gox’s accounts, apparently to hide the fact that the platform had lost money to hackers.
“The charge of electronic record tampering is true and deserves punishment, but there’s no criminal evidence of embezzlement,” the court said in its verdict.
Karpeles had caused “massive harm to the trust of his users,” the court said. “There is no excuse for the defendant, who is an engineer with expert knowledge, to abuse his status and authority to perform clever criminal acts.”
A Mystery Semi-Solved?
The court findings largely clear Mark Karpeless of any wrong doing. Although tampering with financial records is a very serious matter, it is not quite at the scale of a mastermind who lived off customers funds with the stash hidden somewhere.
Not that anyone really thought that was the case, but small dippings into customers funds that then becomes a somewhat common habit was one theory of what happened at MT Gox.
There remains no concrete evidence of a hack of 800,000 bitcoins, but this is now an international investigation with name and fame on offer for whoever can find the coins.
What is known is that MT Gox had a blackhole of 80,000 bitcoin when Mark Karpeles bought it from Jed McCaleb, the exchange founder, in 2010.
A hack then occurred in 2011, but at the time it was claimed no coins had been stolen with Karpeles moving circa 424,000 bitcoins to show they were still in his custody.
How many coins the exchange was meant to have at that point wasn’t and still isn’t know, but something probably did happen at that time because the leaked gox accounts appear to show a 400,000 bitcoin shortfall.
The theory goes that Karpeles tried to buy the initially missing 80,000 btc with profits made by running the exchange.
The suggestion is that this turned into 800,000 somehow, but there is no reason to think there needed be any more than 80,000 missing.
Even if we assume in pure speculation that 400,000 was stolen in 2011, that would make it a combined 480,000, leaving another circa 400,000 bitcoins.
Those are huge numbers now, but not so huge at the time. The suggestion is that due to transaction malleability these coins were stollen slowly and gradually over many years with them then scattered on the blockchain. So making it very difficult to manually trace, but potentially possible with software.
Some chain analysis firms have in fact claimed they know where the coins are. If so, then the culprits may well be found, but this must have been a very sophisticated hack so who done it, time might tell.