The two-and-a-half year Mt. Gox trial is nearing an end, and former CEO Mark Karpelès is sticking to his guns, denying the embezzlement and manipulation charges levied against him.
A Brief Recap
Mt. Gox was the world’s largest bitcoin exchange, at one point boasting between 70-80 percent of the world’s trading volume. Because of this, the exchange held tremendous sway over crypto markets in their earlier years.
Though the exchange had fallen victim to hacks on several occasions, it suffered its final blow in February 2014 when an unnamed attacker or attackers allegedly managed to get away with nearly 850,000 bitcoin. Within weeks, Mt. Gox was declared insolvent and filed for bankruptcy protection in both Japan and the United States.
The exchange later found 200,000 bitcoin on an old digital wallet.
Though the details of the hack remain vague, some online theories suggest the company never held the total amount of bitcoin that it had claimed.
Bitcoin’s Biggest Trial
In 2015, Mark Karpelès was officially charged in Japan for embezzling coins from the exchange and artificially inflating trading volumes.
Though Karpelès isn’t accused of being involved in the hack that took down the exchange and subsequently led to a 2-year bitcoin bear market, the ex-CEO has been charged with manipulating data on the exchange and stealing funds that were to be used in the growth and development of the business.
The trial, which began in July 2017, has revealed some startling details about the business, however.
First and foremost, an exchange between then-owner Jed McCaleb and Karpelès reveals that Karpelès purchased the exchange with as much as 80,000 bitcoin already missing-in-action, with McCaleb suggesting that Karpelès could essentially sneak the coins back into the operation before it became a problem.
The trial has also confirmed the existence of a “Willy Bot,” or automated trading bot, which could have been used to artificially inflate bitcoin trading prices on the exchange.
Though Karpelès’ defense claims that this bot was used “for the good of the company,” and was not illegal, and that hackers were responsible for the fraudulent trading that resulted in increased upward pressure on bitcoin prices, only the ongoing trial will be able to put an end to this mystery.
Could This Happen Again?
Karpelès’ trial is scheduled to wrap up in March 2019., but it’s clearly had an impact on the markets and the community.
Exchanges are now held to extremely high standards of security and accountability, though some bad actors are still making waves. In 2018 alone, over $700 million has been lost from hacks on exchanges, including the Canadian MapleChange ‘hack’ which many have called an exit scam.
Even with stricter regulations, attacks and scams do happen and will likely continue to happen for some time no matter how seriously a company takes its security.
Always do your due diligence and trade at your own risk!
Originally posted on Crypto Insider : https://cryptoinsider.com/mt-gox-ceo-innocence/