Mt. Gox Misappropriated Clients’ Deposits, Say Former Employees

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Mt. Gox Misappropriated Clients’ Deposits, Say Former Employees
Mt. Gox Misappropriated Clients’ Deposits, Say Former Employees

Mt. Gox Misappropriated Clients’ Deposits, Say Former Employees

After Mt. Gox collapsed, layers of lies and cheating activities are coming to light. Now, a group of former employees who got affected by the bankruptcy of the Bitcoin exchange claim that Mt. Gox allegedly spent money from its clients’ deposits on operating expenses. They say it started as early as two years ago.

Talking to Reuters, the group of former employees admitted that Mt. Gox was misappropriating the funds invested by clients to run the day to day costs. To show their concerns, some of these former employees even reached the top brass of the Tokyo-based Bitcoin exchange and challenged CEO Mark Karpeles to give clarification on the issue.

The investors’ money according to these former employees, who want to remain anonymous for various reasons, was spent on rent in the high-status Tokyo office building, office equipment like a robot and a 3D printer, and a special edition Honda Civic imported for CEO Mark Karpeles from the UK.

The Former Employees Had Shown Their Concern Earlier as Well

The group of former employees had showed their concern earlier as well and for that they even sought clarification from CEO Mark Karpeles. They were worried that Gox was spending more money than it was making from its services. They often inquired about the proof that client deposit amounts were protected.

Though the CEO Karpeles had then assured these former employees that customers’ money was being protected and it was not being misappropriated, they still had doubts as he did not put forward any evidence or proof. The group also claims that the Bitcoin exchange’s attention later on turned towards side projects like Bitcoin Cafe and not the core services.

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However, as Mt. Gox was a privately-held company wherein 88% shares were held by Karpeles, he was able to do what he wanted and none could force him to release any financial details in the time it operated. This was the first Bitcoin exchange that came to existence when the digital currency was just a couple of months old.

However, the fall from grace started in the last year when it faced several technical glitches and often it was out of order for weeks. A major concern with Mt. Gox has always been that it was often under the investigation from the authorities for one or the other reason.

Now, the latest accusation that it misappropriated investors’ funds is something that will affect other companies as well. Bitcoin customers would now suspect other Bitcoin exchanges if they are protecting their investments.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com