Mt. Gox CEO Mark Karpeles Faces Rearrest Over $2.6M Theft in Bitcoin

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by Tatsiana Yablonskaya · 3 min read
Mt. Gox CEO Mark Karpeles Faces Rearrest Over $2.6M Theft in Bitcoin
Mt Gox Founder Mark Karpeles. Photo: Mark Karpeles/Twitter

New details and new accusation appear in the case against Mark Karpeles who was first arrested in Tokyo on August 1.

Mark Karpeles whose name has been making too frequent appearances in mass media recently came into focus again. The former CEO of Mt. Gox now faces the second accusation in embezzling $2.6 million in customer funds.

Japanese police inform that Karpeles will have to answer the questions about disappeared bitcoin deposits which in total make up $480 million. It hasn’t been confirmed yet but supposedly the money pocketed was spent on software rights. Nevertheless $48,000 went for a luxury bed.

According to Japanese law an accused can be kept under arrest without charge for three weeks at most. Karpeles has already been held in Tokyo for three weeks and as for now a guilty verdict for him could mean only imprisonment and fine of no more than $4,000. With this second accusation the police get a chance to keep him longer while continuing investigation.

Let us remind that Karpeles was initially arrested for fraudulently manipulating the digital currency system and inflating the bitcoin balance in fake accounts that belonged to Mt. Gox. The police also suspected that he had misappropriated deposited bitcoins by carrying out cryptocurrency buy orders from bogus accounts.

In July former Mt. Gox employee Ashley Barr created an ‘Ask Me Anything’ forum on Reddit to expose the Mt. Gox fraud. According to Barr Karpeles shared his bank account with investor deposits and sounded indeterminate when asked about the firm’s financials: “Mark was definitely in over his head [..] and didn’t have the logic/communicative skills to know how to ask for help. He desperately needed it, but didn’t even know it. It was incredibly frustrating.”

Mt. Gox exchange actually saw its best time when it handled around 80% of world’s bitcoin transactions. After Karpeles’s manipulations the company claimed to have lost 850,000 bitcoins and declared itself bankrupt. Later Karpeles “found” 100,000 of the lost bitcoins in so-called “cold wallet” – a storage device not networking to other computers.

After the arrest Karpeles firmly stuck to his initial version – he put the whole blame on hackers who must have been stealing bitcoins from Mt. Gox for years.

No wonder that the case aroused numerous lawsuits from former angry customers. Not long ago a Kyoto resident claimed for a refund from Mt. Gox. He used to have 458 bitcoins in the company account which is equal to ¥31 million. At first sight the case seems to be quite simple – a person wants a refund of his stolen money. I

ndeed bitcoin turned out to be much more complicated and ambiguous issue. The Japanese appeared in the court alone, without attorney, and faced his lawsuit being dismissed. Presiding Judge Masumi Kurachi explained that bitcoin can hardly be referred to tangible assets: “Bitcoin is more like a slippery asset because transactions between users are structured in such a way that calls for the involvement of a third party.”

The investigation is going on and we will keep you updated!

Tatsiana Yablonskaya

Taking strong interest in blockchain, cryptocurrencies, and IoT, Tatsiana Yablonskaya got deep understanding of the emerging techs believing in their potential to drive the future.

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