Mark Karpeles, the beleaguered former CEO of Mt. Gox, may no longer be broke. In July 2017, he pleaded not guilty to fraud and embezzlement related to his company’s collapse. Now the WSJ has noted a twist of fortune: with bitcoin’s almost 650 percent price rise in 2017, Karpeles may still be left with millions of dollars even after settling dues.
At one point Mt. Gox controlled over 80 percent of the global BTC/USD trade. However, in February 2014 the company abruptly filed for bankruptcy, cutting thousands of users off from their accounts and funds. In one of history’s biggest heists it lost 850,000 bitcoins — equivalent to about $6.1 billion at today’s prices (plus another $536 million if you include Bitcoin Cash chain-split value).
Embezzlement Case Against Karpeles
During bankruptcy, BTC was worth between $550 USD and $650 — but now the price has crossed $7,500. Later the company said it had “recovered” about 200,000 BTC. Frenchman Karpeles, currently on trial in Tokyo, was charged with moving $3 million from company customer funds to his personal account.
His charges and trial do not involve the 850,000 BTC theft itself, but instead Mt. Gox’s fiat funds and company accounts. Karpeles has previously spent a year in Japanese prison, before charges were laid.
In a three-judge panel hearing, Karpeles said: “I swear to god that I am innocent”. Around 25,000 people filed claims against Mt.Gox with the Japanese bankruptcy trustee, but as of 2017 no funds have been returned to creditors. A lawsuit filed by Coinlab against Gox before the bankruptcy is allegedly holding up the claims.
Unfair Ruling for Gox Creditors
Claimant Kolin Burges shared his personal view in an article titled “Who will get our 200,000 bitcoins?” posted on mtgoxprotest.com. Burges is the founder of the website, where he shares his views on the way the case is moving forward.
He believes the Mt. Gox creditors will only receive approximately $483 per bitcoin, since trustee Nobuaki Kobayashi calculated the losses according to BTC value at the time of the 2014 bankrupcty.
The remaining amount will go to the shareholders of the company — the largest of which is Karpeles himself. That would again make him a millionaire, after paying all dues. He was previously a millionaire while Mt.Gox was functional, and was known to spend money lavishly on his own lifestyle and company side projects like the never-opened “Bitcoin Cafe”.
The case of Mt. Gox is an example that shows how governments and legal bodies are unprepared to deal with problems occurring due to virtual currencies. Changes to the existing law are a must, to protect registered exchange investors against theft and other crimes.
For now, Gox claimants can only pray that they receive their share of money in BTC itself, or at the current bitcoin price.
If this is true, how should Karpeles spend the money? Let’s hear your thoughts.
Images via Jon Southurst, FranceTV