Mt. Gox Chief Denies Stealing $500 Million In Bitcoin As Trial Starts

Tyler Durden's picture

Two-and-a-half years after the collapse of Mt. Gox ushered in a multi-year bear market in the world of digital currencies, the trial of former Gox chief executive officer Mark Karpeles began Tuesday in Tokyo.  Karpeles pleaded “not guilty” to charges of embezzlement and fraud stemming from the collapse of what was once the world’s most-active platform for buying and selling digital currencies. Some 850,000 bitcoins - then worth around half a billion U.S. dollars - were stolen in the hack, which was disclosed in February 2014, along with $28 million in cash from the exchange's bank accounts, according to Reuters.

“The 32-year-old chief executive of defunct Mt. Gox pleaded not guilty on Tuesday to charges relating to the loss of hundreds of millions of dollars’ worth of bitcoins and cash from what was once the world's biggest bitcoin exchange.

 

French national Mark Karpeles filed the plea in response to charges of embezzlement and data manipulation at the Tokyo District Court, according to a pool report for foreign journalists.”

Karpeles was indicted for transferring 341 million yen ($3 million) from a Mt. Gox account holding customer funds to an account in his name during September to December 2013. The prosecution also alleged Karpeles boosted the balance of an account in his name in Mt. Gox's trading system.

In its opening statement to the court, Karpeles' defense team did not dispute that the transfers took place, but denied they amounted to embezzlement. Karpeles told the court he was an information technology engineer.

While the Gox bankruptcy badly damaged the public’s perception of digital currencies – particularly among risk-averse Japanese investors – it did spur Japanese lawmakers to develop a legal framework that officially recognizes digital currencies as legal, regulated assets. It also created a system for grating licenses to digital currency exchanges. Japan this year became the first country to regulate exchanges at the national level, part of a government effort to reestablish its lost influence over the crypto market.

That framework, passed into law earlier this year, officially took effect in April and presaged the entrance of Japanese banks into the digital currencies marketplace.

* * *

However, institutional investors in Japan remain wary, say those running virtual currency exchanges in Tokyo. Only 4 percent of large and mid-sized Japanese firms plan to use bitcoin in the near to medium term, showed a Reuters poll last month.

Karpeles, who disappeared from public view shortly after Gox’s collapse, was rumored to have been the target of a super subpoena, preventing him from discussing Gox or the pending case against him.
But now that the trial is underway, the public may soon receive some long-awaited answers about the hack. Namely: How did hackers infiltrate Mt. Gox? Exactly how long did Karpeles wait to disclose the theft to the public. Mt. Gox subsequently said it had found 200,000 of the missing bitcoins – where were they, who found them, and how?

And, most importantly: Were any Mt. Gox employees complicit in the theft?
 

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Dame Ednas Possum's picture

"I didn't steal it... it doesn't fucking exist."

gigadeath's picture

The Fed makes that theft look like stealing candy. Speaking of stealing candy, watch what happens when a useless eater takes a candybar.

https://www.youtube.com/watch?v=0RPCjsCXaKU

ebworthen's picture

Wait for it..."Vaporized".

SHEEPFUKKER's picture

The honorable John Corzine would be proud of this fine man. 

a Smudge by any other name's picture

Lovely smile. Anybody got a crowbar?

dark pools of soros's picture

Looks like he lost all the stress fat when the heat was on him... he's probably the original DPR as well

ThunderStruck's picture

I didn't do it.... and I'll never do it again...

SoDamnMad's picture

Your honor, there was no intent on my part to steal it...

OpenThePodBayDoorHAL's picture

Um hello the value of the stolen Bitcoins is $1.9B

Toshie's picture

Max jail sentence of 5 years or 500 000 yen ?

Lol.

wisehiney's picture

Anglo pussy.

Thor strike these traitorous sons of yours. 

For being entirely worthless.

sunkeye's picture

Free Jon Corzine.

DIGrif's picture

Screw that, ask the prosecution to show the jury what he stole. Physically put it in their hands.......

fredquimby's picture

Indeed. The only thing they can do him for is perhaps one dodgy transfer that was made from gox to a regular bank that was mentioned above. Nothing else is provable imo.

Exponere Mendaces's picture

He's goiing to prison.

His claims of a "hack" won't stand up in court - its very likely an inside job. I wouldn't be surprised if Roger Ver got implicated too, since he was part of the whole mess declaring cramer-like that "Gox is running normally, and bank transfers are working" before it all went south.

The trial should be fun to watch, I've got my popcorn ready.

I never trusted Gox, so I didn't lost a single bit -- but a lot of people who were more trusting did. The only good thing is that Bitcoin has appreciated rapidly since this incident, so technically Gox is "whole" from the loss, which means they could pay all the depositors back.

Just depends how much the lawyers take for themselves...

 

RedDwarf's picture

Whatever, I'm missing like half a bitcoin from my old MTGox account so someone stole it.  Luckily I moved most of my BTC out before things went south.  It didn't feel right to me.  Course back then BitCoins were MUCH cheaper.

fredquimby's picture

I lost 100 maxcoins when cryptsy folded.

Never leave tokens on an exchange! We said it back then, we still say it now.

I only left the maxcoins there as there wasn't a wallet available at the time. Max Keiser released it so I bought a few for a laugh. haha. I also sold most of my altcoins when he released it as I thought that this was the start of the an altcoin for everyone mania. It was. Kinda And boy is it still ever fun!

RedDwarf's picture

Yes it is.  Going to try to buy some Pillar when it comes out.

Stone Shot's picture

Don't tell me.... Another swarmy Tribesman hits one outta the ballpark. Same as it ever was, same as it ever was!

falak pema's picture

Karpeles will go down in financial parlese along with Nick Leeson, Jerome Kerviel, Bernie Madoff, Bruno Iksil, Jon Corzine...all small guys compared to the TBTF whales who should really be brought to justice.

They own the system and feed the Casino on which the Oligarchs make their money --thru algo front-run --CB easy money fed-- Chukaluck's wheel of fortune; while they sleep; all the while the 99% pay with their blood, sweat and tears.

When the minnows of financial scamming hide the king whales of WS's never ending beanstalk; the Colossus of Rhodes equivalent of the failed paradigm of Capitalism gone mad.

Ace Ventura's picture

Sooooo.....BTC/crypto currency is totally safe, right? LOL

No offense to those who believe in it, but man I just can't develop any trust in this kind of thing. My spidey-sense just goes into red-alert no matter how I try and rationalize it.

dark pools of soros's picture

Blockchain is secure... exchanges?? Not so much

dumbhandle's picture

Banks are not exactly safe.

Money_for_Nothing's picture

They may not know names-and-addresses but they know whose digital wallets these went to. Think of all the agencies that shorted Airline Stock right before 9/11/2001. There is a list and people could be tracked down. Almost assuredly have. But when a government agency does it it isn't illegal (RMN When the President does it it isn't illegal.)

Duty Chief's picture

You are stating something that I think is the most important point of the whole Bitcoin universe.  Can you really track where the coins go and where they came from? Once you find the stolen coins, whose country do they reside in and can you get them back? Who, if anyone, can beheld accountable for theft or fraud?

dark pools of soros's picture

That's why they nabbed Ross while he was logged into his laptop... why that fuck wasn't using a different laptop for everything is beyond belief. And is probably why this guy is the first DPR and needed to hand it off to patsy Ross

fiftybagger's picture

Polo's lookin kinds shaky ala cryptsy, just sayin

Alfred's picture

I can't say this enough

Access to your bit coins is only as reliable as your electricity...

Here in 'Merica, electricity has been fairly reliable, but I wouldn't bet the farm it's gonna stay that way. Its kinda looking a little darker ahead. What could be safer than gold coins between us serfs? Bit coins involve too much faith in technology. Too much magic.

His name was Seth Rich

 

 

 

dark pools of soros's picture

Oh. The old no electricity post on ZH again. You can join the Amish anytime ya know

indio007's picture

You do realize that most things in modern society will be worthless if there is no electricity, right?

Not having access to BTC will be the least of your problems.

indio007's picture

Where's my Bitcoin , Mark?

I don't want the "market value" of my BTC in dollars.

I want the effin' BTC back!

 

 

Needless to say the conviction rate in Japan is nearly 99%.

So I'll hit you up after you get out of jail.

A is A's picture

The court decided to give fixed dollar amounts, which is bullshit. They have locked in a value of $400 something dollars per bitcoin. You believe that shit??? If that ends up being what we get, Japan's legal system is complete garbage. I hope he has a nice yakuza butt buddy in prison.