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Japan

Japanese prosecutors seek 10 years jail time for former bitcoin exchange MtGox's CEO on embezzlement charges

  • French national Mark Karpeles, 33, is accused of fraudulently manipulating data and pocketing millions of dollars’ worth of the virtual currency
PUBLISHED : Wednesday, 12 December, 2018, 4:42pm
UPDATED : Wednesday, 12 December, 2018, 9:38pm

Tokyo prosecutors on Wednesday demanded a 10-year jail term for the former head of collapsed bitcoin exchange MtGox, local media reported.

French national Mark Karpeles, 33, faces charges that he fraudulently manipulated data and pocketed millions of dollars’ worth of the virtual currency.

The Tokyo-based exchange – once the world’s biggest for bitcoin – collapsed in 2014 after cryptocurrency worth half a billion dollars disappeared from its virtual vaults, a mystery that remains unsolved.

Karpeles faces charges that he embezzled about 340 million yen (US$3 million) and altered other data related to MtGox. The trial against him began last July.

But those charges are not directly related to how MtGox lost 850,000 coins – worth about US$480 million at the time.

Tokyo prosecutors argue that Karpeles’s alleged acts “were extremely vicious, as they completely undermined confidence in trading,” according to national broadcaster NHK.

He has denied the charges and has previously told the court: “I swear to God I am not guilty,” reading out a prepared statement in Japanese, according to Kyodo News.

The Tokyo District Public Prosecutors Office declined to confirm the reports and refrained from commenting on when the trial was expected to finish.

In Japanese courts, the verdict and sentence are often handed down at the same time.

MtGox was closed in 2014 after admitting the massive disappearance of the coins. The company initially said there was a bug in the software underpinning bitcoin that allowed hackers to steal them.

Karpeles later claimed he had found some 200,000 of the lost coins in a “cold wallet” – a storage device that was not connected to other computers.

The French national – who cannot leave Japan as a condition of his bail – was originally arrested in August 2015.

He was released in July 2016, after reportedly paying 10 million yen (US$88,000) to secure his release.

MtGox, which once said it handled around 80 per cent of global bitcoin transactions, filed for bankruptcy protection soon after the money went missing, leaving a trail of angry investors calling for answers and denting the virtual currency’s reputation.

The spectacular failure of MtGox temporarily slumped the value of bitcoin before it soared to its all-time high of US$19,511 in December 2017.

Since then, the unit has lost its earlier glamour and now trades at about US$3,343 per coin.

Japan issued new regulations after the MtGox case, yet still the virtual currency exchange Coincheck was forced earlier this year to refund customers more than US$440 million in virtual currency that disappeared from its holdings.

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