UPDATE1: Ex-Mt. Gox CEO acquitted of embezzlement but guilty of data tampering

Japan Economic Newswire |

A Japanese court on Friday acquitted the former chief executive officer of Mt. Gox Co., once one of the world's largest bitcoin digital currency exchanges, of embezzling hundreds of millions of yen from its customers in 2013.

But the Tokyo District Court sentenced Mark Karpeles, the French-born head of the Tokyo-based exchange that went under in 2014, to 30 months in prison, suspended for four years, for manipulating data on the company's trading system.

The 33-year-old had pleaded not guilty to all charges, while prosecutors had called for a 10-year prison term. 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.

Clad in a dark suit, Karpeles sat and listened to a French translation of the Japanese ruling provided by a court interpreter. He now serves as a senior technology officer at a company, according to his friends.

In . Gox suddenly shut down all transactions, causing panic among its customers, many of whom were overseas. It then announced that it had gone bankrupt after having lost about 850,000 bitcoins, worth about 48 billion yen ($430 million) at the time, claiming they were likely stolen through hacking.

Karpeles was arrested in and was later indicted on charges of taking about 341 million yen of customers' money kept in a Mt. Gox account between September and December of 2013 and using it to acquire a software developer and purchase a canopy bed worth 6 million yen among other items.

He was also charged with manipulating Mt. Gox's bitcoin trade data between February and September of 2013 to pad the amount of his accounts.

Karpeles, an enthusiast of Japanese anime and manga, came to Japan from France in 2009. He launched Mt. Gox in 2011 and built it into one of the world's biggest bitcoin exchanges at one point.

The company's bankruptcy procedure, which began in , was switched to a civil rehabilitation procedure in June last year as some creditors sought to collect their assets after the value of bitcoin surged from the time when the company went under.

Mt. Gox's collapse has shaken confidence in cryptocurrencies and prompted Japan to amend laws in 2017 to require their exchanges to be registered and give authorities the power to issue orders for business improvement and suspension.

But the country has continued to see cases of large cryptocurrency losses due to hacking in recent years.

In , 58 billion yen worth of cryptocurrency NEM was stolen from Tokyo-based exchange operator Coincheck Inc. in the largest digital currency heist in history. It was followed by another case in September in which about 7 billion yen worth of digital funds were stolen from Osaka-based Tech Bureau Corp.


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