Mark Karpeles, the founder of the now-defunct Mt.Gox bitcoin exchange, was found guilty of record manipulation and given a suspended sentence of two years and six months. The High Court ruling comes five years after a massive 2014 security breach at Mt.Gox that resulted in millions of dollars in losses for both local and overseas Bitcoin investors.
The courts found Karpeles guilty of “illegally creating electronic records in connection with the mountain”. Gox’s books and was sentenced to two years and six months in prison; He was not found guilty of embezzlement or exacerbated breach of trust. According to the WSJ, Karpeles will not serve a prison sentence if he continues to “behave well” for the next four years.
Story on Mt.Gox
At the time of the hack, the losses were set at 850,000 bitcoins – consisting of 750,000 customer bitcoins, 100,000 own bitcoins and a value of approximately 500 million US dollars. Two hundred thousand bitcoins were later “found” by the company in an old hot wallet, bringing the number down to 650,000, which were lost altogether.
Karpeles was finally on trial in 2015, but not for theft. Instead, he was accused of forging “several years” of trading information at Mt.Gox and embezzling $ 3 million in customer funds deposited with the company.
As reported by the Japan Times, Karpeles came under scrutiny after prosecutors alleged he used the misappropriated money to fund a swanky lifestyle, including living in a rented apartment worth $ 11,000 a month and the regular one Expenses for trips abroad. In addition to personal expenses, he is said to have opened a high-end 3D printing business. Costs that are deemed “unnecessary” for Mt.Gox purposes.
However, Karpeles maintains his innocence until that date and denies any charges made. He told reporters after his last trial:
“Most people won’t believe what I’m saying. The only solution I have is to find the real culprit. “
Mt.Gox regularly liquidates its Bitcoin holdings to compensate customers in 2014-adjusted Fiat amounts. In the past year alone, a stock exchange trustee sold over $ 230 million in tranches made up of bitcoin and bitcoin cash. However, as previously reported by CryptoSlate, the liquidation is more of a legal obligation than an act of goodwill. Under Japanese law, creditors and investors must be compensated and are eligible for protection under a guarantee.
Attackers still at large
Years after the crime, the hackers responsible for stealing bitcoins from Mt.Gox are unknown. However, the incident revealed significant gaps in the way cryptocurrency exchanges operated around the world, leading governments to begin work on regulating and legalizing the nascent asset class.
In 2017, Japan, where Mt.Gox was headquartered, became the first major economy to legalize Bitcoin trading. The state introduced its crypto licensing framework, according to which all exchange operators must meet strict operating criteria and carry out strict KYC procedures for customers.
The social media reception of Karpeles’ verdict has been mixed. Some in the community are satisfied that he was “brought to justice” for Mt.Gox when the exchange was hacked, while others have raised concerns about the relatively light sentence that takes into account the impact it has on the Bitcoin ecosystem. Regardless of public opinion, Bitcoin has recovered from the disaster and new exchanges have filled the vacuum that Mt.Gox once occupied.
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