Mark Karpelès Explained

Mark Karpelès
Birth Date:1 June 1985
Birth Place:Chenôve, France
Birthname:Mark Marie Robert Karpelès
Othername:MagicalTux
Occupation:Entrepreneur
Known For:Founding Member at Bitcoin Foundation, Mt. Gox, Bitcoin
Citizenship:France

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

Early life and education

Born in Chenôve, France, he is the child of Anne-Robert Karpelès, a geologist.[7] He was raised in Dijon.[7] [8] Between 1995 and 2000 he was educated at Collège Prieuré de Binson in Châtillon-sur-Marne, near Dormans.[9] He then spent one year at Lycée Claude Bernard in Paris before completing his education in 2003 at Lycée Louis Armand in Paris.[9]

Career

In 2009, Karpelès founded Tibanne Co. Ltd., a Japan-based bitcoin related technology provider, where he served as CEO.[10] [11] 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.[12] [13]

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.[14] [15] [16] Mt. Gox filed for bankruptcy in Japan on 28 February 2014, and for Chapter 15 bankruptcy in the Texas in March 2014.[17] [18]

In April 2014, following the Mt. Gox hack that resulted in significant Bitcoin losses,[19] 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.[20] [21] They requested a new date for his testimony, which was set for May 5th, 2014.[22] [23]

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.[24] In November 2019, Private Internet Access was acquired by Kape Technologies for $95.5 million.[25]

In 2023, 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.[26]

Judicial proceedings

On August 1, 2015, Japanese police arrested Karpelès. He was suspected of altering data on Mt. Gox's account balances by accessing the company's computer system.[27] [28] [29] Karpelès was released on bail in July 2016, but was required to remain in Japan.[30] On 10 July 2017, he pled "not guilty" to embezzlement and data manipulation charges.[31]

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.[32] 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.[33] Vinnik's arrest was part of a series of US operations against Russian cybercriminals in Europe.[34] [35] In May 2024, Vinnik pleaded guilty to conspiracy to commit money laundering.[36]

On 14 March 2019, the Tokyo District Court acquitted former Mt. Gox chief Karpelès of most charges in major bitcoin case.[37] The Tokyo District Court found Karpelès guilty on only one count of data manipulation related to Mt. Gox's account balances.[38] 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.[39] [40] But the Tokyo District Court found Karpelès not guilty of all other charges and handed down a suspended prison sentence for the falsification conviction.[41] [42] His 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%.[43] [44]

In June 2023, the United States Department of Justice charged two Russian nationals, Alexey Bilyuchenko and Aleksandr Verner, with conspiring to launder approximately 647,000 bitcoins stolen in the 2014 hack of Mt. Gox.[45] The stolen bitcoins were valued at roughly half a billion dollars then.[46] [47] 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.[48] The Department of Homeland Security had also suspected as such in 20122013.[49] [50] Karpelès publicly denied the claim on Twitter[51] [52] and Ulbricht was eventually found guilty.[53]

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.[54] [55]

Mt. Gox bankruptcy proceedings

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 Karpelès with a significant amount of wealth.[56] [57] [58] However, Karpelès, the former CEO of Mt. Gox, stated that he did not want the profits he was set to receive from the bankruptcy proceedings.[59] [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] [63]

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.[64]

Repayment process

On July 5, 2024, Mt. Gox began repaying its creditors in Bitcoin and Bitcoin Cash under the legal rehabilitation plan.[65] 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.[66] [67]

Of the 850,000 lost bitcoins, 200,000 bitcoins were recovered, of which 60,000 were later sold by the trustee to secure funds.[68] Given the dramatic increase in Bitcoin's value, the repayment process is substantial. In early July 2024, Mt. Gox moved 47,228 BTC,[69] valued at approximately $2.7 billion,[70] 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.[71] [72]

On July 22, 2024, the estate transferred $2.85 billion worth of Bitcoin to new wallets, with $340 million of that sum being sent to addresses owned by Bitstamp.[73] Shortly thereafter, an additional 37,477 BTC, worth $2.5 billion, was transferred to an unknown wallet.[74]

As of late July 2024, approximately 40% of the Bitcoin owed to Mt. Gox creditors had been distributed, leaving about 60% still to be returned.[75] This ongoing process involves significant movements in the cryptocurrency market, with the total amount owed to creditors estimated to be around $10 billion.[76]

The commencement of repayments led to significant movements in the cryptocurrency market.[77] The total sum owed to creditors accounts for roughly 0.7% of the total Bitcoin in circulation.[78] 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 $10 billion at a price of $65,000 per bitcoin by end of July 2024. This means that creditors are receiving about 16 times more value in today's market.[79]

Notes and References

  1. News: Mt. Gox CEO Mark Karpeles: 'I am still in Japan' . 2014-02-26 . Forbes . King . Leo . 2014-02-27.
  2. Web site: 2024-07-08 . Bitcoin rebounds to $57,000 after billions in Mt. Gox refunds fueled a selloff . 2024-07-11 . Quartz . en.
  3. Web site: 2024-07-08 . Germans, Mt. Gox, or Feds: Who Caused the Bitcoin Dip? . 2024-07-11 . Financial and Business News Finance Magnates . en.
  4. Web site: Zielinski . Radek . 2024-07-08 . Mt. Gox to repay investors in Bitcoin . 2024-07-11 . ReadWrite . en-US.
  5. News: The Wall Street Journal . Bitcoin's Mt. Gox: a look at the man in charge . Eleanor . Warnock . Takashi . Mochizuki . 2014-02-28 .
  6. News: MtGox: Mark Karpèles, un "supergeek" français au cœur du scandale bitcoin . 20 Minutes . fr . 2014-02-27 . Philippe . Berry . 2014-02-27.
  7. News: Le génie côte-d'orien qui fait trembler le net . Le Journal de Saône et Loire . 2014-01-03 . Vincent . Gautronneau . fr .
  8. News: Mick . Jason . 5 March 2014 . Bitcoin King: Mt. Gox CEO Mark Karpelès' History of Arrests, Firings . . 9 March 2014 . https://web.archive.org/web/20140309102115/http://www.dailytech.com/Bitcoin+King+Mt+Gox+CEO+Mark+Karpels+History+of+Arrests+Firings/article34442.htm . 9 March 2014 . dead .
  9. Web site: Mark Robert KARPELÈS, 28 ans (TOKYO, CHATILLON SUR MARNE, PARIS) . Copains d'avant – L'Internaute . CCM Benchmark Group . fr . 2014-02-27.
  10. Web site: US judge freezes assets of Mt.Gox bitcoin exchange boss. 12 March 2014. CNBC.
  11. News: A Bitcoin Exchange Goes for Respectability. https://web.archive.org/web/20130607113530/http://www.businessweek.com/articles/2013-05-31/a-bitcoin-exchange-goes-for-respectability. dead. 7 June 2013. David Meyer. Businessweek.com. 31 May 2013 . 24 February 2015.
  12. News: Mt. Gox resigns from Bitcoin Foundation . Reuters . 23 February 2014 . 25 February 2014 .
  13. Web site: Mt. Gox quits Bitcoin Foundation board. 24 February 2014. PCWorld. 24 February 2015.
  14. Web site: Erosion of Faith Was Death Knell for Mt. Gox. . The New York Times. 28 February 2014. 24 February 2015.
  15. Web site: 1 April 2013. Jeffries. Adrianne. Barons of Bitcoin. The Verge. 13 March 2014.
  16. Web site: Bitcoin Exchange Mt. Gox Files for Bankruptcy in U.S. -- 2nd Update - WSJ.com . online.wsj.com . dead . https://web.archive.org/web/20140311030453/http://online.wsj.com/article/BT-CO-20140310-712183.html . 2014-03-11.
  17. Web site: Declaration of Robert Marie Mark Karpeles . US Bankruptcy Court for the Northern District of Texas Dallas Division. 13 March 2014. 1. PDF. The document, signed by "Robert Marie Mark Karpeles", was published by Ars Technica on the Scribd website, and according to Ars Technica is a court document filed in US Bankruptcy Court.
  18. Bitcoin Exchange Mt. Gox Files for U.S. Bankruptcy as Death Spiral Continues. WIRED. 24 February 2015.
  19. News: McMillan . Robert . The Inside Story of Mt. Gox, Bitcoin's $460 Million Disaster . 2024-07-11 . Wired . en-US . 1059-1028.
  20. News: 15 April 2014 . Mt. Gox founder won't appear in U.S. for questions about bankruptcy case . 24 February 2015 . Reuters.
  21. Web site: Mt. Gox founder won't attend US bankruptcy hearing . 24 February 2015 . CNET . CBS Interactive.
  22. Web site: John Ribeiro . 15 April 2014 . Mt. Gox seeks postponement of CEO's U.S. court deposition . 24 February 2015 . Computerworld.
  23. News: 15 April 2014 . BBC News - MtGox chief refuses to go to Bitcoin bankruptcy hearing . 24 February 2015 . BBC News.
  24. Web site: Goldman . Joshua . Former Mt. Gox bitcoin exchange CEO Karpeles lands new job . CNET . 2018-04-23 . 2018-04-29.
  25. Web site: Private Internet Access to Be Acquired by Kape * TorrentFreak . 2024-07-11 . en.
  26. Web site: Tomlin . Bennett . 2023-12-19 . Duke Roger Ver becomes finance minister for Joseon . 2024-07-11 . Protos . en-US.
  27. News: 1 August 2015 . MtGox bitcoin chief Mark Karpeles arrested in Japan . 1 August 2015 . BBC News.
  28. News: Jonathan Soble . 1 August 2015 . Mark Karpeles, Chief of Bankrupt Bitcoin Exchange, Is Arrested in Tokyo . 1 August 2015 . The New York Times.
  29. News: 1 August 2015 . Mt. Gox bitcoin firm head arrested . 1 August 2015 . The Japan News by The Yomiuri Shimbun.
  30. Web site: 2016-07-15. Karpeles released on bail in bitcoin embezzlement case. 2021-03-05. The Japan Times. en-US.
  31. News: Chief of bitcoin exchange Mt. Gox denies embezzlement as trial opens. 11 July 2017. Reuters. 2017-11-06.
  32. News: Gibbs . Samuel . 2017-07-27 . 'Criminal mastermind' of $4bn bitcoin laundering scheme arrested . 2024-07-11 . The Guardian . en-GB . 0261-3077.
  33. Web site: Lyngaas . Sean . 2023-05-24 . Russian accused of money laundering lobbies to be included in potential US-Russia prisoner swap CNN Politics . 2024-07-11 . CNN . en.
  34. Web site: De . Nikhilesh . 2024-05-03 . BTC-e Operator Alexander Vinnik Pleads Guilty to Money Laundering Conspiracy Charge . 2024-07-11 . www.coindesk.com . en.
  35. Web site: Russian crypto criminal pleads guilty to U.S. money laundering charges - UPI.com . 2024-07-11 . UPI . en.
  36. Web site: 2024-05-03 . Office of Public Affairs BTC-e Operator Pleads Guilty to Money Laundering Conspiracy United States Department of Justice . 2024-07-16 . www.justice.gov . en.
  37. 2020 . BITCOIN AND THE CROSS-MARKET EFFECTS OF THE MT. GOX MELTDOWN . Issues In Information Systems . 10.48009/3_iis_2020_245-252 . 1529-7314. free .
  38. News: 2019-03-15 . Former Mt. Gox CEO Mark Karpeles Gets Suspended Jail Term . 2024-07-11 . Bloomberg.com . en.
  39. Web site: Khatri . Yogita . 2018-12-12 . 10-Year Jail Term Sought for Former Mt Gox CEO Mark Karpeles . 2024-07-11 . www.coindesk.com . en.
  40. Web site: 2019-03-15 . Mt Gox Bitcoin exchange's Karpeles avoids jail time in Japan . 2024-07-11 . AP News . en.
  41. News: Dooley . Ben . 2019-03-15 . Bitcoin Tycoon Who Oversaw Mt. Gox Implosion Gets Suspended Sentence . 2024-07-11 . The New York Times . en-US . 0362-4331.
  42. Web site: 2019-03-14 . MtGox bitcoin founder learns fate on embezzlement charges . 2024-07-11 . France 24 . en.
  43. Web site: Helms . Kevin . 2019-03-15 . Mt Gox CEO Mark Karpeles Found Not Guilty of Embezzlement – News Bitcoin News . 2024-07-11 . Bitcoin News.
  44. Web site: Why is the Japanese Conviction Rate so High? . 2024-07-11 . Harvard Law School . en-us.
  45. News: Satter . Raphael . US charges two Russians in hack of Mt. Gox crypto exchange . Reuters . 9 June 2023.
  46. Web site: Flashpoint . 2023-06-12 . COURT DOC: Russian Nationals Charged With Hacking One Cryptocurrency Exchange And Illicitly Operating Another . 2024-07-11 . Flashpoint.
  47. Web site: De . Nikhilesh . 2023-06-09 . Mt. Gox's Hackers Are 2 Russian Nationals, U.S. DOJ Alleges in Indictment . 2024-07-11 . www.coindesk.com . en.
  48. Web site: Paul . Kari . 2015-01-15 . Defense in Silk Road Trial Says Mt. Gox CEO Was the Real Dread Pirate Roberts . 2019-05-31 . Vice . en-US.
  49. News: Greenberg . Andy . 2015-01-15 . DHS Believed Mt. Gox CEO Might Have Been Silk Road's Secret Mastermind . 2019-05-31 . Wired . 1059-1028.
  50. Web site: Jeong . Sarah . Was Mt. Gox CEO The Dread Pirate Roberts? The DHS Once Believed It . 2019-05-31 . Forbes . en.
  51. Web site: Koebler . Jason . 2015-01-16 . Mt. Gox CEO Denies Silk Road Involvement: 'I Am Not Dread Pirate Roberts' . 2019-05-31 . Vice . en-US.
  52. Web site: 15 January 2015 . Mark Karpeles on Twitter: "This is probably going to be disappointing for you, but I am not and have never been Dread Pirate Roberts." . 28 January 2015.
  53. Web site: Mullin . Joe . 4 February 2015 . Ulbricht guilty in Silk Road online drug-trafficking trial . 4 February 2015 . Ars Technica.
  54. News: Farivar . Cyrus . 1 August 2014 . Why the head of Mt. Gox Bitcoin exchange should be in jail . 1 August 2014 . Ars Technica.
  55. News: Alonso . Pierre . 1 August 2014 . En France, le passé trouble de l'ancien " baron du bitcoin " . Old bitcoin baron's old trouble in France . 1 August 2014 . . fr.
  56. News: ALEX . Harney . Ra . Stecklow . Steve . Twice burned - How Mt. Gox's bitcoin customers could lose again . 2019-05-31 . Reuters . en.
  57. News: Narioka . Kosaku . 2017-11-09 . Former Bitcoin King Is Bankrupt—And He Could Get Rich Again . 2019-05-31 . Wall Street Journal . en-US . 0099-9660.
  58. Web site: Jeffries . Adrianne . 2018-03-22 . Inside the bizarre upside-down bankruptcy of Mt. Gox . 2019-05-31 . The Verge.
  59. News: Former Mt. Gox CEO Doesn't Want His Billion Dollars . Wall Street Journal . 5 April 2018.
  60. News: 2018-07-12 . The Fight Over Mt. Gox’s Bitcoin Stash . 2024-07-11 . Bloomberg.com . en.
  61. News: Harney . Alexandra . Stecklow . Steve . Twice burned - How Mt. Gox's bitcoin customers could lose again . Reuters . 16 November 2017.
  62. Web site: Rizzo . Pete . 2018-04-04 . Mt Gox CEO: I Don't Want Bankrupt Bitcoin Exchange's Billions . 2024-07-11 . www.coindesk.com . en.
  63. Web site: 2018-04-04 . Mt Gox CEO: I Don't Want Bankrupt Bitcoin Exchange's Billions . 2024-07-11 . Yahoo Finance . en-US.
  64. Web site: Gray . Duane Morris LLP-C. Neil . 2021-06-29 . U.S. Federal Lawsuit by Mt. Gox Customers Cannot Proceed as a Class Action . 2022-01-24 . Lexology . en.
  65. Web site: Sen . Vivek . 2024-07-05 . Bitcoin Price Falls as Mt Gox Starts Repayments . 2024-07-11 . Bitcoin Magazine - Bitcoin News, Articles and Expert Insights . en.
  66. Web site: Sigalos . Ryan . Browne . MacKenzie . 2024-07-05 . Mt. Gox begins repaying bitcoin to creditors a decade after exchange's collapse. What it means . 2024-07-11 . CNBC . en.
  67. Web site: Reynolds . Parikshit . Mishra . Sam . 2024-07-05 . Mt. Gox Begins Repayments in Bitcoin and Bitcoin Cash . 2024-07-11 . www.coindesk.com . en.
  68. Web site: Mt. Gox creditors have until November to file claims . 2024-07-11 . ZDNET . en.
  69. Web site: Godbole . Omkar . 2024-07-05 . Bitcoin Slumps Below $54K as Mt. Gox Moves $2.6B in BTC . 2024-07-11 . www.coindesk.com . en.
  70. Web site: Helms . Kevin . 2024-07-05 . Mt Gox Initiates Bitcoin Repayments to Creditors – Featured Bitcoin News . 2024-07-11 . Bitcoin News.
  71. Web site: Ray . Siladitya . Bitcoin Slumps To $55,000 As Defunct Exchange Mt. Gox Starts Paying Back Creditors . 2024-07-11 . Forbes . en.
  72. Web site: Bambysheva . Nina . MtGox $9 Billion Payout Is Creditors’ Gain But Bitcoin’s Pain . 2024-07-11 . Forbes . en.
  73. Web site: Benjamin . Godfrey . 2024-07-23 . Just-In: Kraken Begins Distributing Mt Gox Creditors In Bitcoin . 2024-07-24 . CoinGape . en-US.
  74. Web site: Karanja . Evans . 2024-07-24 . Bitcoin Cash Price Slides 5% on Escalating Mt. Gox Creditors Kraken Withdrawals . 2024-07-24 . CoinGape . en-US.
  75. News: 2024-07-23 . Bitcoin (BTC) Price Slips as Mt. Gox Repayments Pick Up Steam . 2024-07-24 . U.Today . en.
  76. Web site: Jamal . Nynu V. . 2024-07-24 . Kraken Begins Distributing Bitcoin to Mt. Gox Creditors . 2024-07-24 . Coin Edition . en-US.
  77. Web site: Bitcoin Falls as Mt. Gox Repayment Roils Crypto Market . 2024-07-11 . Investopedia . en.
  78. Web site: Browne . MacKenzie . Sigalos . Ryan . 2024-07-01 . Collapsed bitcoin exchange Mt. Gox is about to unload $9 billion of coins onto the market. Here's what it means . 2024-07-11 . CNBC . en.
  79. Web site: Sigalos . Ryan . Browne . MacKenzie . 2024-06-29 . Bitcoin windfall coming for Mt. Gox creditors after decade-long wait and 10,000% price spike . 2024-07-11 . CNBC . en.

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