Mt. Gox CEO Mark Karpeles Manipulated Funds Dozens of Times, Say Police

The investigation of massive data manipulation at Mt. Gox reveals new details.

As a reminder Mark Karpeles, CEO at Mt. Gox, was arrested at his apartment on August 1, 2015. He was accused of fraudulently manipulating the digital currency system and inflating the bitcoin balance in fake accounts that belonged to the exchange.

The whole story started long ago of course. Last year the company announced that it was attacked by hackers who had stolen 650,000 bitcoins. It turned out later that most or all of the missing bitcoins were not held by the exchange when it collapsed.

The details of headline-making case are being revealed. Officially Karpeles was arrested for increasing his account for more than $1 million in bitcoin in total. The accused tried to protect himself saying that “the amount tweaked was in range of several thousand yen or several tens of thousands of yen because it was a test-trade with a customer”.

While Karpeles continues to deny all allegations, police have brought one more charge against former CEO during the investigation. He is accused of embezzling about ¥1.1 billion ($8.9 million) from customer deposits and transferring them to the accounts of his other companies. Yesterday morning he was questioned on this accusation at the Tokyo District Public Prosecutor’s Office. By the way Japanese legal system allows to keep a suspect without charge for three weeks in order to get a confession.

Yoshihide Suga, top government spokesman, has commented on the investigation conducted and conformity with requirements of G7 countries: “With respect to virtual currencies such as Bitcoin, we have gathered information and discussed measures. At the G7 summit, it was requested that each country introduces regulations from the viewpoint of measures to stop terrorism financing and money-laundering”.

The police do not reveal all the information it might have discovered so it is still hard to say how far they have come in their investigation.

Karpeles firmly sticks to his initial version – he puts the whole blame on hackers who must have been stealing bitcoins from Mt. Gox for years. The Mt. Gox exchange saw its best time when it handled around 80% of world’s bitcoin transactions. Afterwards the affairs took on an ugly look and the company declared itself bankrupt after the loss of 850,000 bitcoins which at that time was equal to $480 million. It’s interesting that Karpeles claimed later as if he had found 100,000 of the lost bitcoins in so-called “cold wallet” – a storage device not networking to other computers.

The reputation of bitcoin has been tainted by this fraud but let’s follow to what conclusions the Japanese police will come!

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