The former CEO of defunct bitcoin exchange Mt Gox has maintained his innocence during the closing arguments of his trial, Japanese public broadcaster NHK reported.
The France-born Mark Karpeles is on trial in Tokyo on charges of embezzling approximately US$3.1 million and data manipulation while heading the fallen bitcoin exchange.
During the closing arguments, Karpeles also offered his apologies over his failure to prevent the loss of 850,000 bitcoins, a fact which ultimately led to the closure of what was once the largest bitcoin exchange in the world. The apologies are unlikely to mean much since in this particular instance he is not on trial for the loss of the bitcoins but rather his handling of client funds.
A Decade in Prison?
Earlier this month, prosecutors indicated that they were seeking a 10-year prison sentence for the Mt Gox ex-CEO, as CCN reported.
Previously Karpeles has argued that the funds he is alleged to have embezzled were a temporary loan. Prosecutors, however, rubbished this claim saying that there was no paperwork to prove this line of argument.
At the start of the trial, Karpeles also insisted that the funds he is alleged to have embezzled were not really client funds but revenues generated by the cryptocurrency exchange. According to prosecutors, Karpeles used the embezzled funds to invest in a technology startup, purchase luxury items, and even hire prostitutes.
Civil Rehabilitation Proceedings
The trial is coming to a close at a time when plans to compensate investors who lost their digital assets following the hacking of Mt Gox is underway. In September the defunct bitcoin exchange opened its online claim filing system to corporate creditors, and this was about a month after Mt Gox had done the same for retail investors. The filing process ended in late October, and the trustee is expected to submit to the courts a list of rejected and approved claims by January 24 next year.
At the time of the hacking, the price of one bitcoin was approximately US$480. With Karpeles having later found around 200,000 bitcoins that had been kept in cold storage, this would have been enough to compensate all the investors had the exchange remained in bankruptcy and even left the ex-CEO millions of dollars richer at current prices.
However, a Japanese court ruled mid this year that the exchange could exit bankruptcy and start civil rehabilitation proceedings paving the way for creditors to be compensated in bitcoin as opposed to cash.