The former CEO of the fallen Bitcoin exchange Mt. Gox will again be facing legal issues as the Tokyo Metropolitan Police Department is reportedly going to charge him for fraudulent system manipulation. Though this will be for the first time that the authorities are taking action against him, a number of private investigations showed that Mark Karpeles was aware of the mess.
According the report published in the Japanese news portal Nikkei.com Mark Karpeles is a suspect of fraudulently manipulating the cryptocurrency system and inflating the Bitcoin balance in bogus accounts that belonged to Mt. Gox. Interestingly, the Tokyo-based digital currency exchange was once the biggest and most important trading platform.
This Bitcoin ecosystem held a 70% market share within the cryptocurrency market around the world before it collapsed in 2014. Thousands of customers lost 650,000 BTC which when converted to USD is worth millions. Initially it was claimed that it were the hackers who breached the vaults and took away the cryptocurrency.
WizSec Investigation Showed Bitcoins Were Being Stolen from Mt. Gox from 2011
However, a new report released by the Japanese group WizSec in April 2015 showed that Mt. Gox actually started leaking BTC in 2011 and was “practically depleted of Bitcoins by 2013.” Nonetheless, the report that seemed to come from a private investigative journalist group looks to have gained ground among the authorities as the Tokyo police department is investing it again.
The Japanese authorities believe Karpeles played the system for years and even the Tokyo Metropolitan Police Department suspects that the CEO “misappropriated deposited funds by fulfilling received Bitcoin buy orders from fake accounts.” However, fraudulent system manipulation might not be the only reason to arrest the French entrepreneur, as the authorities are also looking to charge Karpeles with corporate embezzlement.
Interestingly, even when Mt. Gox fell, Karpeles maintained that the most likely reason for the collapse of the exchange was a series of external cyber attacks that led to the disappearance of the digital coins. Even after the reports from WizSec came that it was not the breach of security but the planned siphoning of the Bitcoin that caused the fall, he did not admit it.
However, now that new findings show it is very likely that a portion of the BTC considered to be missing was actually fake, the investigation would conclude that somewhere Mark Karpeles was aware of it or may even have masterminded the whole affair.
To contact the reporter of this story: Deepak Tiwari at email@example.com