Embezzlement charge
Japanese prosecutors charge Karpeles with embezzling 321 million yen ($2.66 million) by transferring clients’ funds deposited at Mt.Gox’s bank account to other accounts. Sources say the money was spent on buying computer software development rights and an expensive custom-built bed. Karpeles is suspected of falsifying data on the outstanding balance of the exchange. Karpeles has denied the charges, telling investigators the data falsification was done for the company and he had intended to pay back the money. He has been held without formal charge for six weeks, as allowed under Japanese law.
Arrest warrant for $2.6 million bitcoin theft
After three weeks with no formal charges Japanese police says they will issue a fresh arrest warrant accusing him of pocketing $2.6 million worth of Bitcoin deposits, which was mainly spent on buying software rights, but also includes $48,000 for a luxury bed. Police are also reportedly interested in questioning Karpeles about the disappearance of 850,000 coins worth 48 billion yen last year. They were valued at around $480 million at the time of the disappearance, and $387 million at current exchange rates.
Arrested
Karpeles is arrested at his home by Japanese police who say he accessed a computer system and falsified data on its outstanding balance. Police say Karpeles protested at his arrest and said he will not sign any documents until his lawyer arrives. The Tokyo Metropolitan Police say they believe Karpeles had manipulated transaction records on a computer system that Mt. Gox used to swap Bitcoins for dollars, and had “unjustly inflated the balance” of an account held under his name:
He created false information that $1 million had been transferred into the account, when in fact it had not been.
Karpeles has not been formally charged. Police can detain him for up to 23 days before charging him.
U.S. bankruptcy approved
U.S. Bankruptcy Judge Stacey G. Jernigan accepts Mt. Gox’s U.S. filing and recognizes Mt. Gox’s Japanese bankruptcy as the foreign main proceeding. The ruling empowers the company’s Japanese trustee to examine witnesses, gather and review evidence, and oversee assets in the U.S. She says
This is really going to be all about the customers, who make up almost all of the creditors, and trying to get them a recovery
Bitcoin traders settle class actions
According to a statement and court filings, U.S. and Canadian customers have agreed to settle their proposed class action lawsuits by supporting a plan by Sunlot Holdings to buy the exchange and accept their share of bitcoins still held by Mt. Gox. Sunlot plans to buy Mt. Gox for one Bitcoin (less than $500).
The customers will share in a 16.5 percent stake after Mt. Gox is sold to Sunlot, a firm backed by child actor-turned entrepreneur Brock Pierce and venture capitalist William Quigley, and split the 200,000 bitcoins that Mt. Gox said it found after seeking bankruptcy protection. They will also split up to $20 million held by the administrator for Mt. Gox. Jay Edelson, the lead attorney in the U.S. case said:
This is the customers’ best option and the only chance they have for full restitution
The settlement releases Jed McCaleb, and Gonzague Gay-Bouchery, who have committed to help pursue the class action against the remaining defendants: Karpeles, Tibanne, Mizuho Bank Ltd and others.
‘No Prospects’ to revive exchange
The Tokyo District Court dismisses an application for civil rehabilitation and appoints an administrator of the company’s assets in place of Karpeles.
Karpeles: There are no prospects for the restart of the business. The dismissal of the application for commencement of a civil rehabilitation procedure will create great inconvenience and concerns to our creditors for which we apologize
The administrator, lawyer Nobuaki Kobayashi, said in a separate statement that the court will probably order the start of bankruptcy proceedings. How the company is treated will be decided by taking into account factors including whether there is any candidate to buy the business, Kobayashi said. Kobayashi also said any investigation of the liability of Karpeles will be conducted as part of the bankruptcy proceedings.
Sued for unfinished work
Karpeles is sued by a customer who claims he had paid 15,000 euros ($20,700) for a website to be developed that was never built. The Tokyo District Court rules in May 2013 that Karpeles has to return the money.
Arrested on return to France
Karpeles is arrested by BEFTI (Brigade Investigation of Fraud in Information Technology) after allegations that he stole his employers’ data. He describes the BEFTI officers as “barbaric”, commenting that the arrest was “like no other”. After 13 hours in jail and a search of the servers, Palm Pilot, and other home computers, he was released after making a statement.
Convicted of computer fraud
[alert]Note: Exact year is unknown.[/alert]
According to Reuters, blog posts Karpeles wrote in 2006 say he was arrested twice in France before he was 21 for computer fraud-related charges. One resulted in a 3-month suspended sentence. French authorities in Tokyo said they have seen confirmation of one prior conviction, but do not have details.
Indeed, during my misspent youth, I made a huge, huge mistake. Enough silliness that I found myself locked into custody and brought temporarily placed in the “mousetrap” (souricière: possibly “n.f. (pol.): ‘Baited trap’ laid by the forces of law-and-order.”). This was followed by an investigation of more than a year, which eventually ended in a trial.
I will not give too much detail about what I did wrong, just say it concerns payment systems on the Internet. I spent two years taking risks becoming larger, perhaps because it was an exciting side … whatever, I ended up getting arrested (in rather bizarre circumstances, noting that when I was arrested, I was just in a police station to file a complaint for something else).
Karpeles then notes he had to undergo psychiatric review, and that it was the psychiatrist who gave him an interest in Japan.
Then I had the right to visits to a shrink. And it turned out, after much discussion, this psych was also interested in Japan (except that a psychologist there earns a rather good living, and they can go regularly) … And I had a agreement with the therapist. The agreement was rather simple. I had to do historical research in the history of Japan and write a report. Obviously it was not so complicated for me, but I could still see and more interesting things about some of the history of Japan.
In the end he stated in his report (which I have a copy) that I was not responsible for my actions, and that the abuse of cannabis was bad for my mental health. I was rather shocked (I never, oh, ever smoked substances “illegal”, I swear on it), then after thinking a lot, I finally concluded that it was can not be so bad as that. In the end, the trial was not concluded too bad for me (3 months suspended sentence disappearing after 5 years, and nothing in the criminal record).