Mt. Gox CEO Charged With Stealing $2.7 Million

An anonymous reader writes: After being arrested six weeks ago in Japan, Mt. Gox CEO Mark Karpeles has now been formally charged with the theft of $2.66 million worth of clients' money. "Tokyo-based MtGox shuttered last year after admitting 850,000 coins — worth around $480 million at the time, or $387 million at current exchange rates — had disappeared from its digital vaults. The exchange, which once said it handled around 80 percent of global Bitcoin transactions, filed for bankruptcy protection soon after the cyber-money went missing, leaving a trail of angry investors calling for answers." Karpeles still denies doing anything illegal. The case is proving difficult for Japanese authorities to unravel, and they're taking it as slowly as they legally can.

Comments

just copy the bitcoins

[known_coward_69]

they are digital, you can't steal them

Re:just copy the bitcoins

[ShanghaiBill]

He's going to jail. In Japan, the prosecutor decides if you are guilty, and then the court just rubber-stamps the decision. The conviction rate is over 99%.

Re:just copy the bitcoins

[SScorpio]

Sounds like he didn't have the Wright defense attorney.

Re:just copy the bitcoins

[TheCastro1689]

In Japan there are at least two courts you go through, kind of like a grands jury in the States first. But if you're found guilty in the "grand jury" you're definitely going to be found guilty in the regular court.

Re:just copy the bitcoins

[Fire_Wraith]

They do tend to bring only cases they think they'll win - there aren't any plea bargains (which is a huge improvement over the current US justice system). That said, they also have a big problem with police/prosecutors relying on (often coerced) confessions to win convictions.

Also, there has been something of a tradition that many judges are inclined to trust the prosecutors/police, that's only more recently been whittled away at with some of the evidence that's come to light in old cases with DNA evidence brought in. Consider Hakamada Iwao, who was found guilty of murder, only to be exonerated 45 years later when DNA testing proved his innocence. One of the original judges reportedly considered committing suicide out of shame over it:

http://www.theguardian.com/wor...
http://www.nytimes.com/2014/03...

But what about the MTG cards?

[mrthoughtful]

What happened with all the MTG cards?! They've got to be worth something!

If he stole 1 billion worth

[future assassin]

he could have applied for a gov bailout and used that to pay himself a bonus.

Caveot Emptor

[Moof123]

Hard to have any sympathy for the situation. If you sign up for an currency that is designed to be outside of the world governments, don't come crying to the government that dumb ass idea blew up in your face.

Re:Caveot Emptor

[njnnja]

Although your conclusion

there's no guarantee that those people will get their money back - unlike with a government-issued, government-insured currency.

is sound, it's actually a little more subtle than that. The reason that people who lost money in Mt Gox can't get their money back isn't because it was in Bitcoin. In theory, the US government could decide to insure Bitcoin deposits in FDIC-regulated banks (of course they don't currently), even though the US government can't print Bitcoin (of course, the value of that guarantee is only as good as the US government's ability to get its hands on Bitcoin if a bank goes under). The reason people won't get their money back from Mt Gox is because Mt Gox isn't an FDIC insured bank. Even if people just deposited US Dollars in Mt Gox, they would have lost everything when it was stolen because there is no "deposit insurance" for a company that isn't FDIC-insured.

While it may seem like I am being pedantic for the sake of a silly "gotcha," that is not my intent. Instead, the very important point that this illustrates is that there is a big difference between Bitcoin as a currency, versus "Bitcoin" as a financial system. As strong as Bitcoin as a currency may be, the Bitcoin financial system is barely embryonic and needs to do a lot to develop the kind of institutional heft that the current financial system has. Note that this does not have to be centralized (and certainly doesn't have to be done through a government), but it's much more likely that large numbers of ordinary Joes will use Bitcoin only if the larger system is more robust.

Re:Terminology problems

[pla]

The term vault shouldn't be used anyway, unless the "vault" computer is literally air-gapped.

Most vendors who really take BTC (as opposed to just using an instant-exchange payment processor to convert it to USD) do exactly that (though they use the term "cold storage").

They have a live (hot) wallet and an offline (cold storage) wallet (and usually a "watch" wallet, which allows verifying transactions to the hot wallet without any risk of compromise); the hot wallet regularly sends its balance (over a certain amount you want on hand) into cold storage, leaving only what you can bear to lose in the hot wallet.

The cold storage never even needs to power up unless you want to withdraw from it (which takes a few extra steps to do securely - Basically you need to make a new cold storage wallet and spend the entire old one between your hot wallet and your new cold storage wallet); but when talking about having a few million dollars on hand, only a moron would try to save themselves the extra five minutes it takes to do it right, once a month or so.

We'll never know - Japan's investigators are bad

[Sarusa]

Japan's criminal justice system is terrible, just terrible.

Crime is very low to start with so police are mostly helpful cop on the corner type or worst case dealing with drunks, gropers, or teen prostitution (but they usually don't bother with that one). There are a very few 'elites' who handle the nasty stuff, and they have an extremely high conviction rate because once they finger you you're going to jail whether you did it or not. Prosecution, defense, and judge all go with that (the detective said so!), so the only thing up for debate, really, is the sentence. There's a grand jury for a few things but they're mostly go along go along too.

And they know nothing at all about technology. There was a thing two (?) years ago where some mother's apartment dwelling otaku freak was cancelling Kurko's Basketball (a popular manga/anime) events left and right for over a year and they couldn't do a damn thing about it. Eventually the freak got so cocky he got careless and did things like using messenger cats. My memory's a little hazy, but it went on seemingly forever and the cops were completely helpless. And they're terrible with corporate crime like this (the handling of the Olympus affair was a disgrace) since usually it's all a matter of what Japanese politicians you have in your pocket - but apparently Mt. Gox didn't have any. Whoops.

I think Karpeles did it, or at least someone close to him at Mt. Gox did it, because it's just entirely too fishy, but I don't think this will prove it.

embezzlement: taking for your own use ANYTHING en

[raymorris]

embezzlement:
The fraudulent appropriation to his own use or benefit of property or money in trusted to him by another
-Black's Law Dictionary

One can embezzle any type of property, including horses, currency, and chocolate. The distinguishing feature of embezzlement is that the culprit as been entrusted with the property. Theft would be if he took the thing from you without your permission. Embezzlement is when you hand him the thing, expecting him to hold it for you, but he uses it for himself.

Embezzlement applies to Mt Gox because people sent their stuff to Mt Gox willingly.

Re:We'll never know - Japan's investigators are ba

[Zontar_Thing_From_Ve]

And they know nothing at all about technology. There was a thing two (?) years ago where some mother's apartment dwelling otaku freak was cancelling Kurko's Basketball (a popular manga/anime) events left and right for over a year and they couldn't do a damn thing about it. Eventually the freak got so cocky he got careless and did things like using messenger cats. My memory's a little hazy, but it went on seemingly forever and the cops were completely helpless. And they're terrible with corporate crime like this (the handling of the Olympus affair was a disgrace) since usually it's all a matter of what Japanese politicians you have in your pocket - but apparently Mt. Gox didn't have any. Whoops.

I was intrigued by this, so I did a little research. It's a shame you really did not do a very good job here with explaining what happened as your post was interesting and on topic, but yeah, this paragraph could have been a lot better. The "otaku freak" as you call him did not personally cancel anything as your writing seems to claim. What he did was send threatening letters, sometimes with suspicious liquids or powders, to various places that were associated with the anime or its writer in some way and those places canceled many events related to Kuroko's Basketball. As to why he apparently had it in for this particular anime, it gets into sub-genres of anime that I'm not really qualified to talk about it and it seems that maybe he had a problem with the people who were interested in it and focused his rage at the creators and supporters. Apparently popular anime series have "events" of some kind in various places, but I have no idea what goes on there.

Anyway, Japan sounds better to me than some countries I could name where not only is it impossible to lock up anybody for the rest of their life no matter how many people they kill, they actually start to feel sorry for the criminal because he's been locked up.