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Mt. Gox Questioned By Employees For At Least 2 Years Before Crisis

Posted by samzenpus on from the I'm-not-sure-about-this dept.

Rambo Tribble (1273454) writes "Reuters reports that Mt. Gox employees began to question the handling of funds at least two years ago. Although only CEO Mark Karpeles had full access to financial records, a group of a half-dozen employees began to suspect client funds were being diverted to cover operating costs, which included Karpeles' toys, such as a 'racing version of the Honda Civic imported from Britain.' Employees confronted Karpeles in early 2012, only to be given vague assurances with a 'pay no attention to the man behind the curtain' ring. Unfortunately, since Mt. Gox was not regulated as a financial institution under Japanese law, it is unclear what recourse might be gained in pursuing this question."

11 of 134 comments (clear)

  1. I wouldn't want to be Mark Karpeles at all. by caluml · · Score: 4, Insightful

    I wouldn't want to be Mark Karpeles at all. He's going to have annoyed a lot of dodgy characters who want their money back. I think he'll be looking over his shoulder for the rest of of his life.

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    1. Re:I wouldn't want to be Mark Karpeles at all. by ObsessiveMathsFreak · · Score: 4, Insightful

      If Karpeles was smart enough, he would have been careful to avoid the accounts of Russian Oligarchs etc, and instead simply have stolen money from unconnected, largely unmonied Libertarians who have little to no legal recourse. Since there is no society, these types would have little means of coming back at him.

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    2. Re:I wouldn't want to be Mark Karpeles at all. by houstonbofh · · Score: 3, Insightful

      With all that money he can get a new identity. He can get plastic surgery to change his looks, and hire excellent security.

      Assuming that he did not blow it all as he got it thinking the gravy train would never run out... And based on how things unfolded, I am guessing it went that way.

  2. Now we'll find out something by Animats · · Score: 5, Insightful

    Now that ex-employees are talking to the press and the cops, we'll find out what was going on.

    The Reuters article makes it clear that Karpeles had exclusive personal control over Mt. Gox's cash. That probably means he'll be the one going to jail. I've been writing for months (ever since Mt. Gox suspended US dollar withdrawals last summer) that Mt. Gox was either incompetent, broke, or crooked. Now it looks like all of the above.

    Why would Karpeles import a Honda Accord R from the UK to Japan? They're made in Japan.

    1. Re:Now we'll find out something by afgam28 · · Score: 4, Informative

      He imported a Civic, not an Accord. There are two cars called the "Civic Type R", one of which is made in Japan (and also sold in the US) and the other is made in England (and sold in Europe). The former looks like this:

      http://www.allvehicles.co.uk/c...

      The latter looks like this:

      http://upload.wikimedia.org/wi...

  3. Re: Easy by O('_')O_Bush · · Score: 5, Informative

    ...? That isn't what a Ponzi scheme is. That is just fraud.

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  4. Re:bitcoin by Nidi62 · · Score: 3, Insightful

    i wonder if us customers can sue and use these laws.

    Remember, though, the IRS considers Bitcoin "property" not "money".

    So sue/press charges on Mt. Gox for loss/theft of property? If bitcoins are property, then an exchange would be like a storage place, or maybe a consignment shop. If you put your physical items in any of those places and then one day the owner says "oops, your stuff is gone, sorry"(especially due to the actions/fault of the owner), you would be able to go after them for the loss of your assets. It should be the same case with bitcoins.

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  5. Pro tip by glasshole · · Score: 5, Insightful

    Never ever work for a company where only the CEO has access to the financial records.

  6. Wrong on many levels by Dan+East · · Score: 3, Informative

    You know things are really screwy when Japanese cars are being imported from Britain to Japan.

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  7. Underbody LEDs ... by perpenso · · Score: 4, Funny

    What the hell is a "racing version" of a Honda Civic.

    For many, one with underbody LEDs. :-)

  8. Weasely sentence in the article by Arthur+B. · · Score: 3, Insightful

    "It is unclear how Japanese law would treat any such diversion of customer funds as Mt. Gox was not regulated as a financial institution. As a private firm in which Karpeles held an 88 percent stake with no declared debt, Mt. Gox was under no obligation to share any details on its finances."

    The lack of regulation means that they cannot prosecute the *lack of disclosure* but the article makes it sound like it implies they cannot prosecute the fund diversion itself. Of course you can, it's embezzlement, there are laws on the book against it, and no you don't need to be "regulated" for these laws to apply.

    Financial regulation is something that can make such frauds harder to perpetrate, it's not what makes is illegal. Sheesh.

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