Mark Karpelès

Mark Karpelès
Born
Mark Marie Robert Karpelès

(1985-06-01) 1 June 1985 (age 39)
Chenôve, France
Other namesMagicalTux
CitizenshipFrench
OccupationEntrepreneur
Known forFounding Member at Bitcoin Foundation, Mt. Gox, Bitcoin

Mark Marie Robert Karpelès[1][2] (born 1 June 1985), also sometimes known by his online alias MagicalTux, is the former CEO of bitcoin exchange Mt. Gox.[3][4] Under his leadership, Mt. Gox was the world's largest bitcoin exchange, handling over 70% of all bitcoin transactions at its peak.[5][6][7] Born in France, he moved to Japan in 2009.[8][9]

Early life and education[edit]

Born in Chenôve, France, he is the child of Anne-Robert Karpelès, a geologist.[10] He was raised in Dijon.[10][11] Between 1995 and 2000 he was educated at Collège Prieuré de Binson in Châtillon-sur-Marne, near Dormans.[3] He then spent one year at Lycée Claude Bernard in Paris before completing his education in 2003 at Lycée Louis Armand in Paris.[3]

Career[edit]

Karpelès started his career as a PHP developer.[12] According to Karpelès' LinkedIn page, he worked from 2003 to 2005 at Linux Cyberjoueurs as a software developer and network administrator.[12]

In 2009, Karpelès founded Tibanne Co. Ltd., a Japan-based bitcoin related technology provider, where he served as CEO.[13][14] He was a founding member of the Bitcoin Foundation, created in 2012 with a mission to standardize and promote bitcoin, and served on its board until February 2014.[15][16]

Karpelès acquired the Mt. Gox bitcoin exchange site from programmer Jed McCaleb in 2011 which was later incorporated in Tokyo, with its original owner receiving 12% shares of the new company.[17][18][19] Mt. Gox filed for bankruptcy in Japan on 28 February 2014, and for Chapter 15, Title 11, United States Code bankruptcy in the United States (Texas) in March 2014.[1][20][21]

In April 2014, following the Mt. Gox hack that resulted in significant Bitcoin losses,[22] Karpeles was subpoenaed by the United States Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) to appear in Washington, D.C. for testimony on 18 April 2014. Mt. Gox lawyers filed a court response stating that Karpelès did not have legal representation for this matter and therefore declined to appear on the initial date.[23][24] They requested a new date for his testimony, which was set for May 5th, 2014.[25][26]

After the collapse of Mt. Gox, Karpelès joined London Trust Media, the company behind Freenode and Private Internet Access, as its CTO in April 2018.[27] In November 2019, Private Internet Access was acquired by Kape Technologies for $95.5 million.[28]

In 2023, Mark Karpelès was appointed as the Minister of Technology for Joseon, a virtual nation-state. In this role, Karpelès is involved in overseeing technological developments and innovations within the jurisdiction of Joseon, which emphasizes cyber sovereignty and the use of blockchain technology​.[29]

Judicial proceedings[edit]

On August 1, 2015, Japanese police arrested Mark Karpelès. He was suspected of altering data on Mt. Gox's account balances by accessing the company's computer system.[30][31][32] Karpelès was released on bail in July 2016, but was required to remain in Japan.[33] On 10 July 2017, he pled "not guilty" to embezzlement and data manipulation charges.[34]

In 2017, Alexander Vinnik, the Russian operator of the Bitcoin exchange BTC-e, was arrested in Greece and indicted for laundering over $4 billion, including funds stolen from the hack of Bitcoin exchange Mt. Gox.[35] US authorities accused Vinnik of using BTC-e to launder money for individuals involved in crimes such as computer hacking and drug trafficking. They also linked him to the collapse of Mt. Gox in 2014, alleging that he laundered the stolen funds through BTC-e and Tradehill, another exchange he owned.[36] Vinnik's arrest was part of a series of US operations against Russian cybercriminals in Europe.[37][38]

On 14 March 2019, the Tokyo District Court acquitted former Mt. Gox chief Mark Karpelès of most charges in major bitcoin case.[39] The Tokyo District Court found Mark Karpelès guilty on only one count of data manipulation related to Mt. Gox's account balances.[40]

Tokyo prosecutors had indicted Karpelès on a series of charges, including embezzlement and aggravated breach of trust, and called for a 10-year prison sentence.[41][42] But the Tokyo District Court found Karpelès not guilty of all other charges and handed down a suspended prison sentence for the falsification conviction.[43][44]

Karpelès’s acquittal on the more serious allegations of embezzlement and aggravated breach of trust was a surprise. The conviction rate in Japan after prosecutors file criminal charges is above 99%.[45][46]

In June 2023, the United States Department of Justice charged two Russian nationals, Alexey Bilyuchenko (43) and Aleksandr Verner (29), with conspiring to launder approximately 647,000 bitcoins stolen in the 2014 hack of Mt. Gox. The stolen bitcoins were valued at roughly half a billion dollars then.[47][48]

The lawyers for Ross William Ulbricht, defending him at his trial for operating the undercover Silk Road marketplace, claimed in 2015 that the pseudonymous "Dread Pirate Roberts" behind Silk Road was not him but Karpelès.[49] The Department of Homeland Security had also suspected as such in 2012–2013.[50][51] Karpelès publicly denied the claim on Twitter[52][53] and Ulbricht was eventually found guilty.[54]

In 2010, at the age of 25, Karpelès was found guilty of fraud during a trial in absentia in France. The charges stemmed from his actions related to a private server. He admitted to having "pirated" this server. He received a suspended sentence of one year in jail.[55][56]

Mt. Gox bankruptcy proceedings[edit]

Bankruptcy Proceedings and Repayments[edit]

Mt. Gox's bankruptcy proceedings initially planned to repay creditors in Japanese yen at a price of approximately 483 US dollars per bitcoin, resulting in a total repayment of 45.6 billion Japanese yen (around 400 million US dollars). At the market price at the beginning of 2022 (around $35,000 per bitcoin), this would have left Mark Karpelès with a significant amount of wealth.[57][58][59] However, Mark Karpelès, the former CEO of Mt. Gox, stated that he did not want the profits he was set to receive from the bankruptcy proceedings.[60] Under Japanese bankruptcy laws, around $1 billion of the money received would go to the company’s shareholders, with the largest being Karpelès’ company Tibanne, which owned 88% of Mt. Gox.[61][62]

In June 2018, the Tokyo District Court approved the petition by creditors to begin civil rehabilitation proceedings. This allowed for more flexible repayment terms, including compensation based on the current value of the lost coins. Creditors were able to start filing new claims under these proceedings on August 23, 2018. However, by June 2021, a U.S. Federal lawsuit by Mt. Gox customers was unable to proceed as a class-action lawsuit, which placed hopes of compensation in jeopardy.[63]

Repayment Process Initiation in 2024[edit]

On July 5, 2024, Mt. Gox began repaying its creditors in Bitcoin and Bitcoin Cash under the legal rehabilitation plan.[64] Attorney Nobuaki Kobayashi oversees the process, ensuring that all creditor verifications and agreements are in place before disbursements. The repayments mark a significant moment as creditors have been waiting for nearly a decade since the exchange’s collapse in 2014.[65][66]

Of the 850,000 lost bitcoins, 200,000 bitcoins were recovered, of which 60,000 were later sold by the trustee to secure funds.[67] Given the dramatic increase in Bitcoin's value, the repayment process is substantial. In early July 2024, Mt. Gox moved 47,228 BTC,[68] valued at approximately $2.7 billion,[69] out of its offline wallets as part of the repayment process. Entities like MtGoxBalanceBot have been transparently tracking these movements, providing updates to the community.[70][71]

The commencement of repayments led to significant movements in the cryptocurrency market.[72] The total sum owed to creditors accounts for roughly 0.7% of the total Bitcoin in circulation.[73] The 850,000 lost bitcoins were worth approximately $450 million at the time of the hack, and the 140,000 bitcoins recovered are worth around $8.4 billion at a price of $60,000 per bitcoin in early July 2024. This means that creditors are receiving about 16 times more value in today's market.[74]

References[edit]

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  2. ^ Farivar, Cyrus (10 March 2014). "MtGox files for US bankruptcy protection to put lawsuits on hold". Ars Technica.
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External links[edit]

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