The biggest and most notorious Bitcoin exchange hack will be scrutinized in a Tokyo court this week as Mt.Gox’s Mark Karpeles is brought before the law to answer charges of embezzlement and data manipulation.
“He is keeping calm as the trial gets under way," his lawyer Kiichi Lino said, also stating that Karpeles plans to plead not guilty.
Living large
A total of $480 mln dollars was emptied from the digital coffers of the then largest digital currency exchange in the world. Up to about 80 percent of all Bitcoin action came and went through Mt. Gox’s doors, but, in 2014, the exchange was shut down after having to admit that 850,000 coins had gone missing.
At first, the explanation given was that there was a bug in the software that allowed hackers into the exchange that saw them walk off with millions of dollars from the Mt.Gox user base.
Karpeles, who at his peak, was living large as the head of the most successful Bitcoin exchange, was arrested twice in 2015 for embezzlement, but he was released on bail and has been awaiting trial since then.
Karpeles was renowned for living large, staying in a $11,000 per month penthouse and reportedly spending money with reckless abandon, including on prostitutes
Calling it quits
Mt. Gox soon filed for bankruptcy after this major scandal to try and protect themselves from a slew of angry investors and customers. The effect of this misappropriation of funds left a huge dent in the confidence of digital currencies and saw a crash in its price.
Following the pressure and demands for the return of funds to customers, Karpeles came forward and said he had found some of the missing coins on a cold storage device, 200,000 in all.
Not justice for all
Unfortunately, the focus on the trial will not resolve all the issues that have arisen from the disappearance of the funds, in fact, it will do very little to aid those affected by the disappearance.
Kolin Burges, and investor from Britain that was stung by the Mt.Gox hack, admits that the trial is the right thing, but probably won’t ease those who were at ground zero.
"The charges only cover a subset of the issues which were happening at MtGox, so I don’t expect that we will find out most of the information we want to know.”
“I’ve not had any back yet, but hopefully, eventually all the creditors will get a small percentage of their money back from the bankruptcy distribution," Burges said.
Karpeles has been implicated in hacking and price manipulation before. In 2010, after writing in a blog his aversion to cybercrime, the Mt. Gox CEO was sentenced in a Paris court to a year in prison in absentia for hacking. He was currently living Tokyo and involved in Bitcoin at the time.