The prosecutors of the Tokyo District Court have demanded a ten-year prison sentence against Mark Karpeles, former CEO of what was once the world’s largest Bitcoin stock exchange. The prosecutors are seeking a long prison sentence for embezzlement of funds from Mt.Gox clients. However, Karpeles denies all allegations, a report says.
The prosecutors accuse Karpeles of embezzling about 340 million yen of accounts managed by Mt. Gox on behalf of clients in the last four months of 2013. The prosecutors also say that Karpeles used the money for business acquisitions and rent payments. In addition, Karpeles is said to have spent part of the money on prostitutes.
Karpeles said the money was taken as a temporary loan. However, the District Court argued that there were no documents relating to the loan granted. They also indicated that there was no intention to repay the loan. The prosecutors of the Tokyo District Court said: “There was no documentation of loans and there was no intention to repay the money”. They proposed a harsh verdict because Karpeles embezzled a large amount of customer funds from Mt.Gox.
The court also said that Karpeles allegedly manipulated accounts by changing the stock market data. The court has also claimed that he violated some of the company laws in embezzlement of customer funds.
The sinking of Mt Gox
In May 2014, 200,000 “lost” Bitcoins were rediscovered in a digital memory that was in use before the hack. This frozen Bitcoin reserve has gained some value over the years, so that the values far exceeded the victims’ claims for lost investments.
In June of this year, the court transferred the case to a civil rehabilitation trial, which enabled the former stock exchange investors to repay Bitcoin.