Prosecutors in the Tokyo District Court are requesting that Mark Karpeles, former CEO of defunct exchange Mt Gox, be sentenced to prison for ten years. This request occurred during the final argument of the trial; it is not a plea deal. Therefore, an official sentence will be issued soon.
There exists some misconception in the crypto space that the Karpeles got away with his alleged illicit activities during the collapse of Mt Gox. The reality is that Karpeles has been on bail since July 2016, after spending less than a year in jail. His court case continues to be active.
Karpeles is accused of embezzling JPY 340 million from Mt Gox accounts in the final four months of 2013, and using that money for business acquisitions and rent. The prosecutors specifically said: “There was no documentation of loans and there was no intention of paying back… His responsibility… is severe.” Further, they accuse Karpeles of manipulating account data to cover up the fact that the money was no longer there.
Mt Gox was the biggest Bitcoin exchange in the world when it collapsed in 2013. In total, it lost BTC 850,000 worth USD 450 million at the time, although BTC 200,000 were later found. The loss of the biggest Bitcoin exchange and funds caused a serious disruption to the entire crypto space, leading to Bitcoin’s price crashing from USD 1,100 to less than USD 200 in the following two years.
Fortunately for the customers, the drastic increase in Bitcoin’s price since the collapse of Mt Gox will ensure that they get full refunds and then some in terms of fiat, although not in terms of Bitcoin. This is because the 200,000 recovered Bitcoins are worth USD 660 million at this time. The court-appointed custodian actually cashed out a significant fraction of the Bitcoins at a much higher price earlier this year. Refunds to Mt Gox customers are expected to begin in Q1 2019.
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