The former CEO of Mt. Gox could get into prison with a harsh sentence

The former CEO of Mt. Gox could get into prison with a harsh sentence

It’s close to five years now since the collapse of Mt. Gox, which was once the leading Bitcoin cryptocurrency exchange. Based in Japan, the company fell afoul of funds embezzlement and claimed theft of client funds which led to its foreclosure.

Now half a decade later and yet the victims of the mismanagement of the exchange are yet to receive justice. On Wednesday, prosecutors in the case against the then CEO of Mt. Gox Mark Karpeles requested the courts to sentence Karpeles 10 years for his crimes which according to the prosecutors include embezzling client funds for personal businesses.

Documents from the courts show that the prosecutors claim that Karpeles embezzled more than 340 million yen, money he used to finance own personal business acquisitions and paying for rent.

In Karpeles’ defense, the money was meant to be accounted as a temporary loan but the prosecutors denied yesterday saying that “there was no documentation of loans and there was no intention of [him] paying back.” In this regard, the prosecution claimed that his “responsibility is severe”, and therefore warrants a harsh sentence for his betrayal against his clients.

 Karpeles manipulated the exchange’s books

The court documents also show that the prosecution claims that Karpeles manipulated the exchange’s books to reflect wrong data thus hiding the fact that he was embezzling the funds. Following this allegation, they have also leveled charges against him for violation of the Japanese corporate law.

The Mt. Gox Bitcoin exchange filed for bankruptcy in February 2014 after losing about 850,000 bitcoins (worth at the time $450 million) and JPY 2.8 billion in fiat. Karpeles denied any charges leveled against him for involvement in the alleged theft of the funds claiming that the exchange was hacked. About 200,000 bitcoins were later recovered.

This incident led to a bitcoin price slump which lasted for two years and saw the bitcoin price fall from $1,100 down to $200. The 200,000 bitcoins have since gained in value and should be expected to be used to reimburse the victims of the Mt. Gox incident starting January 2019.

Following the request of the prosecution for the court to jail Karpeles ten years for his crimes, the court is expected to give its rulings soon.