Founder of Bitcoin Exchange Mt.Gox Sentenced to Over Two Years

Mark Karpeles, the founder of the now-‘non-exisent’ bitcoin exchange Mt.Gox, has been found guilty of tampering with records and given a suspended prison sentence of two years and six months. The High Court decision comes after five years of huge security breach event that occurred in 2014 at Mt.Gox which resulted in losses worth millions for both local and foreign bitcoin investors.

The court found Karpeles guilty of “unfairly creating electronic records” in connection to Mt. Gox’s books and has been given a sentence of two years six months. However, he was not found guilty of misuse and aggravated breach of trust.

During this fraud case, losses were quoted at 850,000 bitcoins—including 750,000 customer bitcoins and 100,000 of the exchange’s own collectively amounting to approx US$ 500 million. Out of these, 200,000 bitcoins were later “found” in an old hot wallet by the company in which bought the number down to 650,000.

Karpeles was eventually put on trial in 2015; instead of theft, he was charged for faking trading information at Mt.Gox and embezzling US$ 3 million in customer funds deposited with the company. The case got sensitive when prosecutors claimed he used the embezzled money to live a luxurious lifestyle, which included a high-end apartment with US$ 11,000-a-month rent and regular overseas trips. Moreover, he reportedly launched a high-end 3D printing business; a cost deemed “unnecessary” for Mt.Gox’s purposes. However, Karpeles claims to be innocent to this date and denied all charges levied.

Five years after the crime, the hackers involved in stealing bitcoins from Mt.Gox remain unknown. However, the incident exposed serious loopholes in the way cryptocurrency exchanges were operating across the globe, resulting in governments beginning initial work on regulating and validating the new imperfect asset class.

It was in 2017 when Japan became the first major economy to validate bitcoin trading and Mt. Fox was also initially headquartered there. The country launched a framework for its crypto-licenses wherein exchange operators need to meet strict operational criteria and conduct strict KYC procedures on customers.

Crypto community has shown mixed response to Karpeles’ sentence. Some believe that he was “brought to justice” as the executive responsible for Mt.Gox when the exchange was hacked, while others feel that he has been given light punishment considering the impact it had on the Bitcoin ecosystem.

 

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