If you have to be reminded on Mt. Gox, it just means you didn’t have any investment with them. So for you lucky ones out there, here’s the reminder.
Mt. Gox was the world’s largest bitcoin exchange, at one point boasting between 70-80 percent of the world’s trading volume. Because of this, the exchange held tremendous sway over crypto markets in their earlier years.
Though the exchange had fallen victim to hacks on several occasions, it suffered its final blow in February 2014 when an unnamed attacker or attackers allegedly managed to get away with nearly 850,000 bitcoin. Within weeks, Mt. Gox was declared insolvent and filed for bankruptcy protection in both Japan and the United States.
The exchange later found 200,000 bitcoin on an old digital wallet.
Though the details of the hack remain vague, some online theories suggest the company never held the total amount of bitcoin that it had claimed.
Crypto Biggest Trial
In 2015, Mark Karpelès was officially charged in Japan for embezzling coins from the exchange and artificially inflating trading volumes.
Though Karpelès isn’t accused of being involved in the hack that took down the exchange and subsequently led to a 2-year bitcoin bear market, the ex-CEO has been charged with manipulating data on the exchange and stealing funds that were to be used in the growth and development of the business.
This week in court in Tokyo, Karpeles apologized for not being able to avoid his exchange being hacked, but also reiterated the idea that he is innocent. In July, he declared that he treated the subtracted money “as a loan from the company,” and that he was going to settle later.
Karpeles has been charged with embezzlement of approximately 340 million yen (about $3 million) from the exchange and manipulating its data to inflate its cash balance. Karpeles allegedly transferred 340 million yen belonging to customers from a Mt. Gox account to his personal account between September and December 2013.
The trial is coming to a close at a time when plans to compensate investors who lost their digital assets following the hacking of Mt Gox is underway. In September the defunct bitcoin exchange opened its online claim filing system to corporate creditors, and this was about a month after Mt Gox had done the same for retail investors.
The filing process ended in late October, and the trustee is expected to submit to the courts a list of rejected and approved claims by January 24 next year.
At the time of the hacking, the price of one bitcoin was approximately US$480. With Karpeles having later found around 200,000 bitcoins that had been kept in cold storage, this would have been enough to compensate all the investors had the exchange remained in bankruptcy and even left the ex-CEO millions of dollars richer at current prices.
If found guilty, Karpelès could face up to ten years in prison. Earlier in the month, prosecutors on the case called for such a sentence given the “extremely vicious” nature of the acts.
According to the prosecutors, the embattled Karpelès embezzled funds in the last quarter of 2013, using the misappropriated money for acquisitions and rent payments. In their closing arguments at the time, the prosecutors said:
“There was no documentation of loans, and there was no intention of paying back.”
This statement came as a result of Karpelès’s counterclaim that the funds were supposed to be a temporary loan. The prosecutors rejected his argument calling his actions a betrayal of his clients and a breach of their trust.
During the closing arguments, Karpeles also offered his apologies over his failure to prevent the loss of 850,000 bitcoins, a fact which ultimately led to the closure of what was once the largest bitcoin exchange in the world.
The apologies are unlikely to mean much since in this particular instance he is not on trial for the loss of the bitcoins but rather his handling of client funds.
The trial which has been taking place at the Tokyo District Court started last year in July. A verdict is expected on March 15, 2019.