Mt Gox CEO Mark Karpeles Sentenced to 2.5 Years, but Won’t Go Back to Prison
The Tokyo District Court today found former Mt. Gox CEO Mark Karpeles guilty of record tampering — but not guilty of embezzlement. He was handed a 2.5-year prison sentence, which was suspended for four years, meaning Karpeles will not return to jail unless he commits another crime in that period. The trial, which has run since July 2017, did not concern the 600,000+ bitcoins that went missing from Gox’s wallets — leaving some customers with (dollar-equivalent) losses in the millions.
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Previous to his charging and trial, Karpeles had already spent 11 months in Japanese prison as local authorities attempted to investigate the missing BTC and any other wrongdoing at the company that may have accompanied it.
He has protested both his innocence and treatment by the Japanese justice system — as well as being kept in custody for almost a year without charges, he claimed he was subject to interrogations and pressure to sign a confession.
Karpeles Verdict Brings No Answers or Closure for Mt Gox Creditors
Karpeles’ trial and now verdict was never going to bring any relief or restitution for Gox’s customers, who remain mired in a now-five-year-long claims process.
Their only hope now is an eventual payout in either cash or BTC from Gox’s remaining holdings — roughly 200,000 BTC plus whatever is left of the company’s fiat currency reserves. Even a partial redress in BTC could satisfy many, given the current price of over $3,800 USD, forked assets like Bitcoin Cash and Bitcoin SV, and potential for even higher prices in the future.
Neither investigators nor researchers consider Karpeles to be a suspect in, nor beneficiary of, the massive bitcoin heist that eventually brought Mt. Gox down.
The French citizen has been prohibited from leaving Japan since Gox shut down in February 2014, though in recent times he has taken to social media to defend his actions and respond to various claims about what happened.
Status: currently being flooded with emails about @MtGox civil rehabilitation. Will take a while to get through all emails, so if you’ve sent one please understand it’ll likely take a while for a response.
— Mark Karpelès (@MagicalTux) June 27, 2018
Yes, but… What Happened to All Those Bitcoins?
A Bloomberg report of the verdict noted that Mt. Gox’s sudden closure “triggered a more than two year slump in cryptocurrency prices”. However, there remains some speculation that automated trading on the exchange was responsible for pushing the BTC price up past $1,000 in late 2013.
A 2016 article in The Daily Beast alleged that emails it obtained between Karpeles and original Mt. Gox owner Jed McCaleb revealed both knew of a 80,000 BTC shortfall in the company’s wallets in February 2011 — shortly after Karpeles took the helm.
In those emails, which TDB said were verified as genuine by law enforcement and Karpeles’ lawyers, McCaleb suggested using automated trading bots to edge the bitcoin price upward and use USD to purchase back the missing BTC. Alternatively, Karpeles could simply buy back the missing BTC and cover the shortfall if/when the BTC price rose.
To date, it’s not known whether those strategies were used. However in early 2014 there was speculation that two accounts on Mt. Gox (nicknamed “Willy” and “Markus” by researchers) had exhibited odd patterns of trading activity that may have contributed to BTC’s rapid rise.
That still doesn’t explain the ~600,000 BTC loss at Gox that was eventually revealed, or when exactly the funds went missing (it’s reported to have been between 2011 and 2013). That case involves Alexander Vinnik, a Russian national alleged to be connected to the Gox theft/s — who was arrested in Greece in 2017. Gox researcher Kim Nilsson has said Vinnik was the main suspect in several early bitcoin thefts including Mt. Gox, Bitcoinica, and Bitfloor.
What will happen next in Bitcoin’s most notorious legal drama? Tell us what you think in the comments.
Images via AFP