MtGox’s Karpelès Could Face 10 Years In Jail For Embezzlement

December 13, 2018 12:46 AM

The ex-CEO of the failed MtGox exchange, where 850,000 Bitcoins vanished in 2014, could now face 10 years in jail. Mark Karpelès has been subject to legal proceedings in Japan for criminal allegations of embezzlement and breach of trust. At his first hearing in 2017, he said: “I swear to God I am not guilty.”

As of today, December 12, 2018, reports indicate that Japanese prosecutors are seeking a 10-year jail term for Karpelès, who has been indicted for the embezzlement of $3 million worth of MtGox users’ money. He is accused of transferring that money “to such uses as investing in a software development business for personal interest” from September to December 2013 as well as manipulating data on the exchange’s trading system.

The 850,000 BTC that disappeared from MtGox in February 2014 were worth around $473 million at the time. The amount of missing BTC was reduced to 650,000 when Karpelès, after searching MtGox wallets, found an archived file containing 200,000 BTC. Karpelès told Fortune in April 2018: “At the time, I felt finding these was a good thing for everyone…But now this is also the main reason why we are stuck fighting.”

Prosecutors at the Tokyo District Court today claimed that Karpelès “diverted company funds” to invest in a software business and for personal use. They also say Karpelès is partly responsible for “destroying the confidence of bitcoin users.”

Though it appears that Karpelès has been expecting a jail sentence, he may not have been expecting such a lengthy one. In March 2018, he told Fortune the legal proceedings had affected his employment prospects, saying: “I have no way to be sure that I’ll still be able to work in one year, two years.”

In April, it was confirmed by Fortune that Karpelès was working as CTO for London Trust Media, a “private equity, holdings and incubator firm with a mission to bring power back to the people.” Previously, Karpelès had said he’d been working on a handful of consulting jobs “unrelated to cryptocurrency.” Then, on November 26, 2018, it emerged that he’d been writing PHP code, published on Github.

Sharp-eyed Dogecoin founder Jackson Palmer tweeted the Github discovery:

Posting as “MagicalTux,” Karpelès placed the “Goro” project string on Github and tagged it “help-wanted,” with reference to a Telegram group for interested developers to contribute.

Palmer’s Twitter followers wanted to know why Karpelès was producing the PHP implementation written in Go. Karpelès appears to have anticipated the question, writing: “That’s a good question. PHP is a nice language but is having trouble keeping up with modern languages. This implementation, while far from finished, is trying to make a number of things possible.”

The “things” included the use of Go routines, Go channels, and its memory management within PHP. As well as the “ability to run functions or code sandboxed,” and “easily call the PHP engine from Go to execute pieces of PHP code.”

There have been no commits since December 2. Perhaps he had more pressing matters.

Melanie Kramer is a freelance FinTech, blockchain, and cryptocurrency writer based between France and Canada. Melanie has studied, and retains an avid interest in, global politics, business, and economics.

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