Published: Sun, March 17, 2019
Economy | By

Tokyo Court Finds Former Head of Crypto Exchange Mt. Gox Guilty

Tokyo Court Finds Former Head of Crypto Exchange Mt. Gox Guilty

Reportedly, the Tokyo District Court subsequently found Karpeles culpable of combining his personal funds with those of the exchange to hide the financial losses of the platform caused by hackers. The incident with Mt.Gox pushed the country to introduce a licensing framework for cryptocurrency exchanges. The defense team said during the trial that the exchange's collapse was brought about by hacking and was unrelated to the charges brought against Karpeles. After the incident, the exchange was able to recover 200,000 units of Bitcoins leaving up to 650,000 Bitcoins lost in what is called the Bitcoin Mt.Gox saga.

Mt. Gox was compromised in 2011, as earlier reported, with approximately 24,000 creditors alleged to have been impacted.

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 Dollars to purchase back the missing BTC.

The exchange shut down in February 2014, ushering in a slew of legal actions as users sought to get compensation.

One result of the Mt. Gox fiasco was that CEO Mark Karpeles was arrested by Japanese law enforcement in 2015.

The French businessman was found guilty on charges of record tampering, and was subsequently granted a suspended jail sentence for two and a half years. Ver was adamant this should not have happened, stating, "I think people should be punished AFTER they are convicted, not before" (emphasis his). On July 10, 2017, Karpeles pled "not guilty" to embezzlement and data manipulation charges. He must maintain a good record over the next four years to avoid jail time.

According to the court, Karpeles had "harmed the users' trust greatly" by manipulating data and "abused his expertise as an IT engineer and his position and authority".

The collapse of Mt. Gox had a huge impact on the crypto markets that lasted for more than two years - and indeed, its legacy has continued to weigh on prices.

The charge of electronic record tampering is true and deserves punishment, but there's no criminal evidence of embezzlement. Karpeles said he was interrogated for months without having access to a lawyer.

Leading up to the conviction, Karpeles was held in a Japanese prison for 12 months where he says he was interrogated for 50 days in a row, with sessions lasting up to eight hours at a time.

Images courtesy of Bloomberg, Pxhere, and Pixabay.

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