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Ten-Year Jail Term Looms Large for Former Mt. Gox Chief

Japanese Prosecutors are clamoring a 10-year jail term for former CEO of defunct Japanese Bitcoin exchange, Mark Karpelès. This comes in the midst of the extension announced for civil rehabilitation claims.

More Trouble for Former Mt. Gox Chief

The nightmare does not seem to end for Mark Karpelès, as the Nikkei Asian Review today (December 12) reported that Japanese prosecutors at the Tokyo District Court, called for a 10-year jail term for the Mt. Gox CEO for embezzlement. According to the prosecutors, Karpelès embezzled 340 million yen from accounts belonging to customers in the last quarter of 2013.

Furthermore, the Japanese prosecutors claim that Karpelès used the embezzled funds for personal purposes, such as rent and business acquisitions. The prosecutors are also accusing the Mt. Gox Chief of forging the company’s data, thereby manipulating accounts illegally.

However, during the court proceedings, the defendant, Mark Karpelès, denied the accusations leveled against him. Karpelès responding to the embezzlement accusations stated that the funds acted as a temporary loan.

In response to the former CEO’s statement, the prosecutors at the court said:

There was no documentation of loans, and there was no intention of paying back the money.

The prosecutors went further to demand a harsh sentence for Karpelès. According to the Japanese prosecutors, the Mt. Gox Chief betrayed his clients’ confidence and misused most of their funds.

Former French CEO of defunct Japanese exchange, Mt. Gox, was initially arrested in 2015 for forging the exchange’s system to inflate its account. The Mt. Gox Chief stood trial two years later in July 2017 for the collapse of the company and embezzling funds. Karpelès in a later interview likened the experience of the company’s hack to falling from a building.

Mt. Gox’s Attempts to Pay its Debts

The collapsed Japanese Bitcoin exchange, Mt. Gox, has made moves to compensate its victims following the massive hack in 2014. Former clients of the defunct company called for civil rehabilitation proceedings in 2017, with the courts granting their claims in 2018.

Rehabilitation trustee for the defunct Japanese exchange, Nobuaki Kobayashi, announced  the commencement of the civil rehabilitation proceedings. Initially meant for individual creditors, the rehabilitation process later extended to corporate creditors. The deadline for filing claims was October 22, 2018.

However, Kobayashi announced an extension for filing claims to December 2018 for creditors who were yet to file claims. Although, the rehabilitation officer emphasized that only the court had the power to accept further claims after the initial deadline.

Image courtesy of Shutterstock.

The post Ten-Year Jail Term Looms Large for Former Mt. Gox Chief appeared first on Ethereum World News.

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Ex-Mt. Gox CEO Karpeles Denies Embezzlement as Prosecutors Call For Ten Year Jail Term

Mark Karpeles has repeatedly denied criminal activity related to either the Mt. Gox hack or the alleged embezzlement of funds.

The former CEO of defunct Japanese Bitcoin exchange Mt. Gox, Mark Karpeles, could spend ten years in jail over alleged embezzlement, Japanese daily news outlet Nikkei reported Dec. 12.

Karpeles, who presided over the major hack of Mt. Gox in 2014 that resulted in the loss of 850,000 BTC ($2.87 billion), has repeated denied any wrongdoing.

In a Tokyo court on Wednesday, prosecutors read out an indictment against the embattled executive, who is currently confined to Japan as a condition of his bail, claiming he stole funds worth 340 million yen ($3 million). The prosecution has asked for a ten-year prison sentence for Karpeles’ alleged embezzlement.

While not connected to the hack itself, Karpeles has attracted the attention of authorities as part of the investigation into how Mt. Gox lost so much money.

He has often protested his innocence and publicly appealed to affected traders, speaking to his regret at the events.

The exchange continues to conduct civil rehabilitation proceedings, which should see victims compensated for their losses.

According to Nikkei, Karpeles today denied he “hacked and stole” money on his own, as well as manipulated Mt. Gox ledgers and used the embezzled funds to pay for property rent, furniture and business acquisitions.

It remains unknown when the trail will conclude, the publication added.

Japan continues to safeguard its local exchange sector after another major hack this January saw crypto exchange Coincheck lose over half a billion dollars of altcoins to malicious parties.

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The Mt. Gox Redemption: Heading Toward a Happy Ending?

The story of the infamous cryptocurrency exchange Mt. Gox seems to be taking a twist that could bring a relatively happy resolution to one of the most dramatic episodes in the short history of digital money. As the gates are now open for the Japan-based exchange’s creditors to file rehabilitation claims, chances are that most of the roughly 24,000 bereft patrons will eventually get their funds back and even see some returns on their involuntary, four-year long investment.

The development came along thanks to a group of Mt. Gox creditors successfully mounting an effort to pull the exchange out of bankruptcy proceedings and thrust it into an alternative legal process, known as civil rehabilitation. While some of the defrauded customers still keep pressing for criminal charges against the exchange’s former CEO Mark Karpelès personally, the bankruptcy estate funds are now managed by an independent trustee — Japanese lawyer Nobuaki Kobayashi — who oversees the civil reimbursement process.

Rehabilitation

The logic of the move is that the latter mode, according to Japanese law, would allow for distributing the exchange’s outstanding assets (worth more than $1.3 billion as of press time) among those who had lost their funds amid Mt. Gox’s collapse in 2014. Had it remained in the bankruptcy process, upon its conclusion, the bulk of the money would have accrued to the exchange’s shareholders, most notably the firm’s ex-CEO Mark Karpelès, who, at the time of the collapse, owned 88 percent of Mt. Gox.

Not only this would be a disgrace for the creditors — who had cumulatively lost 650,000 BTC due to Mt. Gox’s going bust — but also something that Karpelès himself would prefer to avoid.

In his 2017 interview to Reuters, the deposed Bitcoin King admitted that he would rather do his best to help creditors move the case from bankruptcy to rehabilitation than deal with a tidal wave of civil lawsuits and death threats that would inevitably descend upon him should he end up with a billion dollars he never earned.

Yet, before all the controversy, lawsuits and universal ignominy, there was a fascinating story of Mt. Gox’s success and downfall that, at various points, touched upon many titans of the cryptocurrency pantheon, and which like no other illustrates the spirit of the industry’s early years.

How it all started

Newcomers sometimes read Mt. Gox as “Mount Gox,” which is not quite correct — there is no topographical connotation to “Mt.” The domain name mtgox.com is short for “Magic: The Gathering Online eXchange,” and reflects the initial idea with which the service’s founder, Jed McCaleb, had registered the website. McCaleb — right, the one who would later go on to create the Ripple protocol — conceived of a platform where the fans of then-popular fantasy game “Magic: The Gathering” could trade the game’s cards like stocks. He quickly grew bored with the idea and moved on to other projects — it wasn’t until July 2010 that McCaleb, now fascinated with the newly found concept of cryptocurrency, reused the domain to create one of the first Bitcoin exchanges.

Always in pursuit of something bigger and newer, McCaleb lasted for less than a year at the helm of Mt. Gox before selling it to Karpelès, a French developer who was looking for a place to start his big journey in the crypto world.

First hacks

According to an email that would later surface in court, Karpelès learned shortly after the purchase that the exchange has already been hacked at least once, leaving a hole of 80,000 BTC on the balance sheet. Worth around $60,000 at that time, the loss didn’t seem dreadful to the new majority stakeholder and CEO — yet, over time, as Bitcoin prices caught wind, the void became ever harder to fill.

Mt. Gox sustained another major hack in June 2011, when criminals broke into the system via a compromised computer that allegedly belonged to an auditor. For a short period of time, the hackers managed to artificially set the price of Bitcoin on Mt. Gox trading platform at one cent, walking away with some 2,000 very ‘cheap’ coins. These events made Karpelès somewhat paranoid over the hacking menace and also contributed to his decision to move the bulk of Bitcoin in the exchange’s possession to cold storage.

These were serious woes, but at least they were known to Mark Karpelès. What he most likely did not realize — until some point in 2013 — was the fact that the Mt. Gox’s online deposit addresses had been compromised as early as in September 2011, when someone had stolen — probably with the help of an insider — the private keys associated with them. Having latched on the platform’s hot wallets, the hackers would go on to gradually drain the exchange’s depository, remaining unnoticed for almost two years.

Meanwhile, Bitcoin began to gain traction. Mt. Gox, powered by changes in back-end software implemented by Karpelès, won the sympathies of the exponentially growing community, which helped add thousands of new customers daily. The number of active accounts grew from 3,000 at the start of Karpelès’ term to almost 1.1 million in early 2013, propelling Mt. Gox to the status of the world’s largest cryptocurrency exchange, responsible at its peak for almost 90 percent of global Bitcoin trading.

Karpelès

A profile put together by Wired in the wake of Mt. Gox’s great meltdown of 2014 paints Karpelès as someone far removed from a crafty financial executive’s stereotypical image. At a time when the share of institutional money in the crypto industry and mainstream media attention afforded to it were both quite modest, it appears that it was still possible for Karpelès to run the world’s largest Bitcoin exchange in an almost makeshift manner, remaining more of a geeky developer than an organized CEO.

Many former-employee accounts highlighted inefficiencies and loopholes in the company’s organizational processes, such as a lack of any version of control software, as well as the fact that every change in source code required Karpelès’ personal approval — which was severely impeding the work of the development team.

An incident indicative of the CEO’s attitude occurred in the wake of the June 2011 hack, when prominent crypto entrepreneurs Jesse Powell, who would later become a co-founder of crypto exchange Kraken, and Bitcoin evangelist Roger Ver were summoned to Tokyo to help get Mt. Gox back online.

After several hectic days of troubleshooting, the platform was still down; yet, going into the weekend, both Powell and Ver were eager to keep on digging into the problem. Both were considerably puzzled when Karpelès failed to show up at the office on Saturday morning, telling them that he wanted to take a break.

‘Crypto heist of the century’

In this light, it doesn’t sound so incredible that Karpelès’ and his team were able to remain oblivious to the money being slowly drained from their accounts for two years. By mid-2013, Mt. Gox was stripped of almost all of its Bitcoin reserves. The Frenchman had most likely realized that there was a hole in the bottom at some point in 2013, but it wasn’t until late February 2014 that the company admitted to having lost 850,000 Bitcoin — worth around $460 million at the time and making up around seven percent of all Bitcoin in circulation.

For some time, the main puzzle around the ‘crypto heist of the century’ remained the question of where the money actually went.

A Swedish software engineer named Kim Nilsson, along with a handful of security experts — with whom he teamed up to form the company WizSec — have been subsequently credited with tracking most of the stolen coins down to the cryptocurrency exchange BTC-E. Allegedly, Alexander Vinnik, a Russian national who owned and operated BTC-E, was directly involved in laundering billions of dollars in Bitcoin — according not only to WizSec, but also a United States Department of Justice investigation. Yet, some observers were not completely convinced by the evidence presented in both reports, suggesting that some things do not seem to add up. Vinnik was arrested in Greece in 2017 and currently awaits extradition to either France (and then, possibly, to the U.S.) or Russia.

Full circle

In March 2014, Mt. Gox reported that 200,000 of the lost Bitcoin have been “discovered” in the old-format digital storage used before the June 2011 hack. Effectively frozen in the bankruptcy estate for the time of litigation, the assets were steadily climbing in value — on top of the manifold increase in Bitcoin valuation since 2014, the future owners of these coins will be entitled for equal amount of the fork offshoot Bitcoin Cash (BCH) — which has now far exceeded the value of the possible victims’ claims.

But here’s the catch: According to Japanese bankruptcy rules, the claims are to be valued at the April 2014 Bitcoin market price, something around $400 million total. In order for Mt. Gox’s creditors and debtors to benefit from the rest, it was essential to start civil rehabilitation — which was approved earlier this summer.

While certainly great news for thousands of the exchange’s creditors, the development might leave some critics concerned about its potential effects on the Bitcoin market in general. As Mt. Gox’s bankruptcy trustee has already been selling sizeable chunks of cryptocurrency over the last few months, speculations surfaced that the move might have been driving Bitcoin prices down.

Mark Karpelès has spent most of his time since 2014 dealing with the fallout from the Mt. Gox’s demise — including having to move every once in a while due to death threats, serving some time in a Tokyo jail before getting out on bail (he still cannot leave Japan) and facing numerous lawsuits in multiple jurisdictions, the latest being fraud allegations brought in front of a U.S. federal judge in Illinois, which Karpelès’ defendants have moved to dismiss.

As for Mt. Gox, the eventual payouts to the victims of its collapse could mark the end of its thorny path. It will certainly remain in history textbooks as a synonym for ‘dangers of cryptocurrency trading,’ engraved in the collective memory of the whole generation of early crypto adopters. Even though Mark Karpelès once mentioned that he was considering reinstating Mt. Gox under new management, perhaps a better way for it to reincarnate was expressed by one Twitter user:

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Mt. Gox Ex-CEO Karpeles Says He ‘Doesn’t Want’ Leftover $1 Bln Post-Liquidation Funds

Defunct Bitcoin exchange Mt. Gox’s ex-CEO claimed in a statement April 4 that he “doesn’t want” the 160,000 BTC ($1.12 bln) that will be left after the exchange repays its creditors.

As part of a Reddit Ask Me Anything (AMA) session Wednesday, Mark Karpeles said that he found the billion dollar windfall, which will come about as a result of Japanese bankruptcy procedures, to be “distasteful”.

“The way bankruptcy law works [in Japan] is that if there are any assets remaining after the creditors have been paid in full, then those assets are distributed to shareholders as part of the liquidation,” he explained in introductory comments.

“That’s the only way any bankruptcy law can reasonably work. And yet, in this case, it produces an egregiously distasteful outcome in that the shareholders of MtGox would walk away with the value of over 160,000 bitcoin as a result of what happened.

I don’t want this. I don’t want this billion dollars.”

Karpeles has presided over the long process of refunding users who lost funds during Mt. Gox’s infamous hack in 2014.

After being released on bail, the Frenchman has periodically appeared in the press and online to answer queries from the cryptocurrency community.

Criticism of both Karpeles and the refund process intensified in recent months after it came to light a board trustee was selling vast amounts of Bitcoin on mainstream exchanges. The volumes were so large that suspicions remain the sales unfairly influenced Bitcoin prices across the globe.

Wednesday’s AMA similarly saw its share of Karpeles detractors, some levelling criticism due to their questions remaining answered for long periods.

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Mt Gox CEO: I Don't Want Bankrupt Bitcoin Exchange's Billions

The former chief executive of what was once bitcoin’s largest exchange has again apologized for his role in the company’s 2014 collapse and demise into bankruptcy.

In a Reddit post on Wednesday, Mark Karpeles issued a letter to the exchange’s users, many of whom have been locked in a years-long battle to retrieve funds lost by the exchange. In the letter, he struck back at the idea that he would personally benefit from how Japanese courts are likely to handle the case.

As reported by the Wall Street Journal, Karpeles stands to receive millions expected to be left over after the exchange’s users have been reimbursed due to the fact all creditors would receive the value of their bitcoin holdings in Japanese yen, not bitcoin itself.

According to Karpeles, the exchange would receive more than “160,000 bitcoin and bitcoin cash” as a result, figures worth north of $1 billion at current prices.

Karpeles wrote:

“I don’t want this. I don’t want this billion dollars. From day one I never expected to receive anything from this bankruptcy. The fact that today this is a possibility is an aberration and I believe it is my responsibility to make sure it doesn’t happen.”

In particular, Karpeles further highlighted his intent to support a “civil rehabilitation” plan that would find the exchange advocating for creditors to be reimbursed in bitcoin, a proposal he’s separately highlighted in past blog posts on the matter.

“I never imagined things would end this way and I am forever sorry for everything that’s taken place and all the effect it had on everyone involved,” he concluded.

While the post lacked new detail on any plans being pursued by Karpeles, moves to sell off the Mt. Gox assets as part of the plan to refund investors are already underway.

Early in March, it was revealed that around $400 million in cryptocurrencies had been sold in the previous few months by the exchange’s bankruptcy trustee, Nobuaki Kobayashi.

The large sale had been controversial, with some in the industry accusing the estate of influencing the decline in bitcoin prices since December 2017.

Mt. Gox image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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The Mess That Was Mt. Gox: Four Years On

Mt. Gox holds its infamous part of Bitcoin’s history as the once biggest cryptocurrency exchange that went under in a cloud of confusion and anger.

February 2014, just over four years ago now, was a worrisome month as the exchange slowly started to capitulate ending in the company filing for bankruptcy. Mt. Gox stated that almost 750,000 of its customers’ Bitcoins, as well as 100,000 of its own Bitcoins, had been stolen. The total loss constituted around seven percent of all Bitcoins available, and worth around $473 mln at the time.

Through the entire Mt. Gox saga, many questions and concerns were raised about Bitcoin, and it took the digital currency a few years to recover from this incident, but still, to this day, there is news emanating about those stolen coins.

The genesis of the world’s biggest exchange

Mt Gox was launched in 2010 by US programmer Jed McCaleb (who later went on to found Ripple) but in March 2011 it was purchased by a French developer and Bitcoin enthusiast Mark Karpelès. The name Mt. Gox stood for “Magic The Gathering Online eXchange.”

Mark Karpelès was involved in a recent radio interview, on March 6, in which he sums up his and his company’s road to fame and fortune.

“It felt like… when you fall from a building and you see the ground getting closer, and you feel like you are about to die. Mt. Gox went from interesting project to being, and I would say, a daily nightmare of dealing with banks, governments, people I never knew existed.”

At that time, something like seven out of every 10 Bitcoin transactions were handled by the exchange.

“I am very sorry that when I was in charge things happened the way they did.”

The first hack

The 2014 Mt Gox hack is known across the crypto community, and its influence is still being felt, but Mt. Gox was hacked back in 2011. It happened most likely as a result of a compromised computer belonging to an auditor of the company.

At that time, the hackers used their access to the exchange to artificially alter the nominal value of one Bitcoin to one cent and then transfer an estimated 2,000 Bitcoins from customer accounts on the exchange.

80 percent dominant

Despite this early setback, Mt. Gox expanded rapidly and by 2013 was the undisputed largest Bitcoin exchange in the world handling as much as 80 percent of all Bitcoin transactions.

While the company was building a considerable presence in the market, internally not all went well.

In 2013, Coinlab, a former business partner of the exchange, sued the company for $75 mln, claiming breach of contract. The contract stipulated that Coinlab would take over the American customers of Mt. Gox, but it never happened.

Additionally, the Department of Homeland Security received claims that a subsidiary of Mt. Gox operating in the US was not licensed and was, therefore, operating as an unregistered money transmitter.

As a result of the investigation, more than $5 mln was seized by the Department from the company’s bank accounts.

  • The infamous hack
  • The so-called hack that led to the collapse of Mt. Gox is still to this day shrouded in mystery as the month of February 2014 saw a confusing procession of events.
  • Feb. 7, 2014: Mt. Gox halted all Bitcoin withdrawals due to transaction malleability. “A bug in the Bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of Bitcoins to a Bitcoin wallet did not occur when in fact it did occur,” a statement read.
  • Feb. 17, 2014: Withdrawals were still halted as the company laid out the steps it was taking to address security issues.
  • Feb. 23, 2014: Mark Karpelès resigned from the board of the Bitcoin Foundation. The same day, all posts on its Twitter account were removed.
  • Feb. 24, 2014: All trading was suspended and then the website went totally offline. A leaked internal document claimed that the company was insolvent, after having lost 744,408 Bitcoins in a theft which went undetected for years.
  • Feb. 25, 2014: Mt. Gox reported on its website that a “decision was taken to close all transactions for the time being,” citing “recent news reports and the potential repercussions on Mt Gox’s operations.”
  • Feb. 28, 2014: Mt. Gox filed for bankruptcy protection in Tokyo, then on March 9, filed for bankruptcy protection in the US.

The month of February shook the Bitcoin world as Mt. Gox went down in a heap, leaving thousands of people out of pocket, confused and angry. From February to the end of March,  the value of Bitcoin declined by 36 percent.

Mt.Gox

Image source: Bitcoincharts

The aftermath

The repercussions from the hack affected not only Mt. Gox and its customers, but also Karpelès.

The CEO of Mt. Gox was re-arrested in Japan in August 2015, after being brought in earlier that year, and accused in fraud and embezzlement, charges not related directly to the theft. He was imprisoned until July 2016, when he was released on bail.

Before his arrest, Karpeles admitted that he had ‘found’ 200,000 of the missing Bitcoins in cold storage on his own accord. This drew suspicion and Karpelès reputation in the community started to dive as more allegations emerged; for example, that he spent the embezzled Bitcoin money on prostitutes.

In the middle of 2017, Karpelès was brought before a Tokyo court to answer charges of embezzlement and data manipulation. During the trial, Karpelès admitted to be operating a so-called ‘Willy Bot’ (obligation exchange).

BTC-e

At the same time as Karpelès was in Tokyo, a strange connection was made: another exchange operator was arrested in connection with the stolen Bitcoin from Mt. Gox.

In July 2017, a Russian national named Alexander Vinnik was arrested by US authorities in Greece and charged with playing a key role in the laundering of Bitcoins stolen from Mt. Gox.

BTC-e was raided by the FBI, causing the site to go down. That was the first time a US authority had seized a foreign exchange on foreign soil.

Investigations by Wizsec, a group of Bitcoin security specialists, had identified Vinnik as the owner of the wallets where the stolen Bitcoins had been transferred, many of which were sold on BTC-e.

Still in the news

With the investigation still ongoing, it is not surprising Karpelès, and Mt. Gox, have still been frequenting the news up until now.

Thus, in November 2017, Karpelès suggested conducting an ICO to raise $245 mln to “revive” Mt. Gox.

This week, unofficial investigations alleged that a UK “shell” company was involved in laundering 650,000 BTC from Mt. Gox. The Always Efficient LLP company was said to have participated in processing the funds hacked from the Tokyo exchange.

Furthermore, experts suggested that the recent price drop of Bitcoin to around $6,000 in February 2018 was down to a Mt.Gox trustee “panicking” and selling $400 mln worth of Bitcoin.

Nobuaki Kobayashi has sold over 35,000 BTC and 34,000 BCH (Bitcoin Cash) in order to pay the defunct exchange’s creditors.

Never forget

A lot has happened in the lifespan of Bitcoin, but probably something of the magnitude of Mt. Gox would never happen again. Exchanges are more closely scrutinized and the distribution of transactions are much wider.

But, the echoing effects of this major hack continue to be felt, and probably will continue, for some time. It could serve as an important case for the community, and a stern warning, that the crypto ecosystem needs to be looked after.

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Karpeles Coin: Mt. Gox Founder’s ICO Plans Cause Community Outrage

From 2011 to 2013, the now-defunct cryptocurrency exchange Mt. Gox, had lost 850,000 Bitcoins it had stored on behalf of its clients and traders. At today’s Bitcoin price, the stolen Bitcoins amount to a staggering $8.25 bln.

In 2014, the Japanese government formed a task force and a trustee to extensively investigate into the case of Mt. Gox, as the company filed for bankruptcy. Former Mt. Gox CEO Mark Karpeles was investigated by the Japanese law enforcement, while former Mt. Gox users were promised compensation from the 202,000 Bitcoins Mt. Gox had recovered.

However, it was recently revealed that former users of Mt. Gox will be unfairly credited with the Japanese yen value of Bitcoin they held in 2013, with Bitcoin price hedged to the price four years ago. Given that Bitcoin price has surged by more than 30-fold, creditors of Mt. Gox are understandably infuriated with the bankruptcy proceedings and are investigating methods of legally challenging Karpeles and Mt. Gox for their remaining 202,000 Bitcoins.

Karpeles reveals ICO plans, community outraged

In a blog post, Karpeles completely dismissed the creditors by expressing his intentions to pay out the minimum amount possible and keeping the majority of the 202,000 Bitcoins.

“Mt. Gox’s bankruptcy should have been a rather boring and long process. Long, because there are many creditors (24,750 people submitted claims as Mt. Gox customers) and because some people are trying to get a part of the cake despite having been rejected by the trustee (CoinLab). Now, far from being boring, this bankruptcy is setting a new kind of precedent. Indeed, the assets held by Mt. Gox when it entered liquidation bankruptcy included some 202,000 BTC, which now have a worth at today’s rate much higher than the sum of all non-erroneous claims filed against Mt. Gox,” wrote Karpeles.

In addition to that, Karpeles introduced his plans to conduct an initial coin offering (ICO) to raise $245 mln to “revive” Mt. Gox. The plans of Karpeles are illogical and delusional to a certain extent, given that Korbit, one of the largest cryptocurrency exchange in the world, was recently acquired for $140 mln by $10 bln gaming giant Nexon.

Karpeles coin

Firstly, it is mindboggling that Karpeles believes he needs more capital than the entire market valuation of one of the successful cryptocurrency exchanges to launch and run a simple trading platform. More to that, the plans of Karpeles to launch an ICO to revive Mt. Gox demonstrates his incompetence and lack of knowledge in the ERC token standard.

Contrary to most beliefs, the ERC20 token standard was not designed for organizations to initiate quick cash grabs. It is not a money generating tool. Rather, a standard with which innovative projects can launch crypto-tokens to serve the needs of the cryptocurrency market.

Evidently, Mt. Gox does not need its own unique cryptocurrency to operate, like every other cryptocurrency exchange in the market such as Coinbase, GDAX, Bithumb, Korbit, bitFlyer, Bitfinex, Bitstamp, Kraken and Gemini do not need their unique cryptocurrencies to operate as trading platforms.

“Launch an ICO to raise money to hypothetically revive Mt. Gox. This sounds more challenging, both legally and because there is no guarantee of raising enough to revive Mt. Gox. In case there is not enough raised it could still be locked to be distributed to creditors, which would be better than nothing,” Karpeles wrote initially.

Later, Karpeles updated his blog post, stating that his lawyers have informed him the legal hurdles he will have to solve to launch an ICO campaign.

Karpeles is directly responsible for the theft of $8 bln from Mt. Gox. Creditors of Mt. Gox have not been credited with the bankruptcy proceedings and Karpeles is already looking into ways to create quick cash grabs.

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Karpeles Suggests Potential For MtGox Revival

In a surprising turn of events the former CEO of MtGox, Mark Karpeles has suggested that he may consider a revival of the exchange that resulted in the single largest Bitcoin loss in cryptocurrency history, and which is currently in bankruptcy. On his personal blog Karpeles soft-pitched the idea of a MtGox ICO to restart the exchange.

The post ironically includes a number of personal comments, including Karpeles mentioning that he doesn’t want to be the enemy of the world after his exchange lost the equivalent of $7 bln at today’s price and declared bankruptcy. He mentions that a few encouraging comments ‘keep him going’.

A revival possible?

For the company to be revived, Karpeles suggests some important things that would need to happen. For starters, he says that creditors would need to ‘cooperate more,’ a comment that may not sit well with those who have had substantial losses from past mismanagement.

Further, Karpeles calls for a potential ICO to raise the funds needed for such an undertaking. Of course, since ICOs are largely built on trust the prospects may be a bit slim. Finally, he offers the company for sale at $245 mln. Creditors have not publicly replied as yet, though much may be said.

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Gox ICO? CEO Karpeles Floats Token Sale to Revive Bitcoin Exchange

A Mt Gox initial coin offering (ICO)? It’s not unthinkable, according to the defunct bitcoin exchange’s controversial CEO.

In a blog post published yesterday, Mark Karpeles detailed possible avenues for reviving Mt Gox, the once-dominant Japanese bitcoin exchange that collapsed amid allegations of fraud and mismanagement in early 2014. Hundreds of millions of dollars worth of bitcoin – at then-current prices – were feared lost, though ultimately 202,000 BTC were retained as assets, under the custody of a trustee.

In the aftermath, Mt Gox entered bankruptcy, and has since been at the center of an acrimonious, years-long claims process, including a $75 million claim from CoinLab. Prosecutors in Japan later charged Karpeles with embezzlement, with that trial beginning earlier this summer.

The blog post also addressed a recent bone of contention: while the value of the remaining Gox BTC has swelled as bitcoin’s price has climbed to close to $8,000 per coin, those seeking to recoup their losses may ultimately collect much less, if anything.

And while some are clamoring for that increase in value to be factored into the payouts, Karpeles pushed back on the idea in the blog post, stating that those gains haven’t actually been realized yet, among other complications (the bitcoins remain in the custody of the Mt Gox trustee).

One possible avenue around the issue: reviving Mt Gox, with a price tag of $245 million. This could be accomplished either through a recapitalization by way of an equity sale or an ICO, according to Karpeles.

He wrote:

“Launch an ICO to raise money to hypothetically revive MtGox. This sounds more challenging, both legally and because there is no guarantee of raising enough to revive MtGox. In case there is not enough raised it could still be locked to be distributed to creditors, which would be better than nothing.”

And in a seeming acknowledgement that the idea is rather far-fetched at present, Karpeles suggested that anyone interested in recapitalizing the exchange should get in touch.

“Should anyone have 245 million USD sitting around and want to purchase MtGox, just drop me an email,” he wrote.

Image via CoinDesk

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.