Mt Gox CEO pleads not guilty to embezzlement

TOKYO: The 32-year-old chief executive of defunct Mt Gox pleaded not guilty on Tuesday to charges relating to the loss of hundreds of millions of dollars worth of bitcoins and cash from what was once the world’s biggest bitcoin exchange.
French national Mark Karpeles filed the plea in response to charges of embezzlement and data manipulation at the Tokyo District Court, according to a pool report for foreign journalists.
Mt Gox once handled 80 per cent of the world’s bitcoin trades but filed for bankruptcy in 2014 after losing some 850,000 bitcoins — then worth around half a billion US dollars — and $28 million in cash from its Japanese bank accounts.
In its bankruptcy filing, Tokyo-based Mt Gox blamed hackers for the lost bitcoins, pointing to a software security flaw. Mt Gox subsequently said it had found 200,000 of the missing bitcoins.
Prosecutors said Karpeles transferred around 340 million yen ($3 million) from an account containing customer funds to an external account during September to December 2013, and increased the balance of the account via “improper operation” of Mt Gox’s trading system, the Nikkei business daily reported on Tuesday, citing Karpeles’ indictment.
Karpeles’ defence told a pre-trial consultation that the remittance was within the scope of the firm’s revenue and not the embezzlement of customer funds, the Nikkei reported. They added the increased balance was part of the administrative process of exchanging cash and bitcoins and therefore not illegal, the Nikkei said. Karpeles told the court he was an information technology engineer.
“I swear to God that I am innocent,” he said in Japanese to the three-judge panel hearing his case, according to the pool report.
The collapse of Mt Gox represented a major setback for bitcoin and badly damaged the image of virtual currencies, particularly among risk-averse Japanese investors and corporations.
But the bankruptcy also prompted Japan to decide how to treat bitcoin, and preceded a push by local regulators to licence virtual currency exchanges. Japan became the first country to regulate exchanges at the national level, part of a government effort to exploit financial technology as a means of stimulating the economy.— AFP

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