Former Mt Gox CEO Mark Karpeles faces 10-year prison sentence

The former CEO of now-bankrupt Bitcoin exchange Mt Gox is facing a lengthy jail term for embezzlement, according to reports in Japan.

Mark Karpeles has been accused of “diverting company funds to such uses as investing in a software development business for personal interest” and “playing a great role in totally destroying the confidence of Bitcoin users.”

The 33-year-old, who was born in France, gave an innocent plea during the first hearing of his trial in July 2017.

He is accused of embezzling a total of 341 million Yen – the equivalent of $3 million – of customers’ money kept in a Mt Gox bank account by transferring it to his own account in Q4 of 2013. Karpeles is also being accused of manipulating data on his company’s trading system to artificially inflate the balance.

Earlier this year he apologised for the exchange’s bankruptcy, saying: “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.”

Mt Gox collapsed in 2014 after claiming to have been hacked for 850,000 Bitcoin, some of which was recovered at a later date.

In June, the Tokyo court issued an order to begin civil rehabilitation proceedings, halting its bankruptcy proceeding.

The case is still ongoing, with Mt Gox trustee Nobuaki Kobayashi seeking to extend the deadline for filing civil rehabilitation claims to December.