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May 23, 2019

MtGox bitcoin founder learns fate on embezzlement charges

MtGox bitcoin founder learns fate on embezzlement charges
'Mark Karpeles, former head of the collapsed bitcoin exchange MtGox, is accused of faking digital data and embezzling millions of dollars' - By: AFP/File Quentin TYBERGHIEN

A Japanese court Friday hands down a verdict in the embezzlement trial of Mark Karpeles, the former high-flying creator of the MtGox bitcoin exchange, whose collapse sparked a crisis for the cryptocurrency.

Karpeles could be sentenced to as much as 10 years behind bars on charges of pocketing 341 million yen ($3 million) of clients' money and falsifying computer data over a period of several years.

Prosecutors claim the high-rolling Frenchman, 33, splashed the ill-gotten proceeds on a luxury lifestyle, as well as on overseas trips for his estranged wife.

MtGox was shut down in 2014 after 850,000 bitcoins (worth half a billion dollars at that time) disappeared from its virtual vaults, a mystery that remains unsolved.

The disappearance left a trail of angry investors, rocked the virtual currency community, and dented confidence in the security of bitcoin.

At one point, MtGox claimed to be handling around 80 percent of all global bitcoin transactions.

However, the charges faced by Karpeles, a self-confessed computer "geek", do not relate directly to the exchange's dramatic collapse.

During his trial, Karpeles apologised to customers for the company's bankruptcy but denied both data falsification and embezzlement.

Karpeles says the bitcoins were lost due to an external "hacking attack" and later claimed to have found some 200,000 coins in a "cold wallet" -- a storage device not connected to other computers.

"Most people will not believe what I say. The only solution I have is to actually find the real culprits," he told reporters after the hearing.

The odds are stacked against Karpeles as the vast majority of cases that come to trial in Japan end in a conviction.

The Frenchman was first arrested in August 2015 and, in an echo of another high-profile case against former Nissan chief and compatriot Carlos Ghosn, was re-arrested several times on different charges.

Karpeles eventually won bail in July 2016 -- nearly a year after his arrest -- paying 10 million yen to secure his freedom pending a trial, which began in July 2017.

During his time on bail, Karpeles has been active on social media -- notably voicing doubts about bitcoin and replying to some media questions about conditions in Japanese detention centres.

However, he has largely avoided commenting on his case in detail.

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