CEO of defunct Mt Gox denies charges of embezzlement

The CEO of defunct Japanese bitcoin exchange Mt Gox Mark Karpeles pleaded not guilty to charges of embezzlement and data manipulation, Reuters has reported. The plea was filed today in the Tokyo District Court, where the French national was indicted for transferring 341 million yen ($3 million) from a Mt. Gox account holding customer funds to an account in his name during September to December 2013. Karpeles’ defense team did not dispute that the transfers took place, but denied that they amounted to embezzlement.

Mt Gox was once the world’s largest bitcoin exchange, handling 80 percent of all bitcoin trades. However, the exchange filed for bankruptcy in 2014 after losing some 850,000 bitcoins – worth around half a billion US dollars at the time – and $28 million in cash from its bank accounts. In its bankruptcy filing Mt Gox blamed the loss on a security flaw, which it claimed had been exploited by hackers. The exchange subsequently announced that it had found 200,000 of the missing bitcoins.
Mt. Gox’s demise damaged the reputation of digital currencies particularly among risk-averse Japanese investors and corporations. But it can be argued that the bankruptcy also had a positive impact on the local cryptocurrency market, as it prompted the Japanese government to decide how to treat bitcoin, and preceded a push by local regulators to license virtual currency exchanges. This year Japan became the first country regulate exchanges at the national level, part of a government effort to exploit financial technology as a means of stimulating the economy, as noted by Reuters.
Many individual investors in the country have responded with renewed interest in bitcoin to Tokyo’s recognition of the virtual currency as legal tender. Still institutional investors and local businesses remain cautious. According to a recent poll conducted by Reuters, only four percent of large and mid-sized firms plan to use bitcoin in the near to medium term.