Insights & Analyses

CEO of defunct, infamous bitcoin exchange Mt. Gox pleads not guilty to embezzling $3M

July 12, 2017

Mark Karpeles, the former chief executive of failed bitcoin exchange Mt. Gox, appeared in court this week accused of spending $3 million worth of customer money for personal use.

Karpeles has plead not guilty to charges of embezzlement and creation of unauthorized records while at the helm of Mt. Gox, a Tokyo-based company that lost some $500 million in bitcoin currency and subsequently filed for bankruptcy in early 2014.

“I have never manipulated the exchange’s data or used customer money for my own benefit, Karpeles said in court this week, according to The Wall Street Journal. “I am innocent.”

Japanese authorities allege that Karpeles transferred $3 million, or 341 million yen, from a Mt. Gox account holding customer funds to one of his own personal accounts in late December 2013. They also claim he modified the online exchange’s systems to inflate his own worth by the equivalent of $1 million U.S.

At its peak, Mt. Gox was the epicenter of the booming bitcoin world, handling the lion’s share of transactions involved in the digital currency. That all came crashing down when a half-billion dollars in bitcoin and $28 million in cash went missing.

Mt. Gox later found 200,000 missing bitcoins, and said the losses were a result of hackers who took advantage of security exploits in their system. Karpeles still maintains that hackers were responsible for any missing funds.

Despite such high-profile incidents in the early days of bitcoin, the digital currency remains popular and growing. In May, Fidelity Investments announced it will allow clients to view bitcoin assets and other Coinbase holdings on their website.

Though it has seen a selloff over the last month, bitcoin has had a tremendous 2017, reaching an all-time high value of $3,025.47 on June 11. That represented growth of more than 600 percent since the start of the year.

The price of bitcoin has fallen in recent weeks, and was valued at about $2,400 as of trading on Wednesday. That’s still up about 450 percent so far this year.