The former head of Mt.Gox, the cryptocurrency exchange that was subject to one of the most high-profile hacks in the industry, has been found guilty of tampering financial records by the Tokyo District Court.
Mark Karpelès is unlikely to serve jail time after being given a suspended jail sentence. The court found that he had mixed personal financial records with that of the exchange and made modifications. However, he has been cleared of charges of embezzlement, as the court concluded that he had acted without malice.
The tampering was an effort to mask the total losses that the exchange suffered.
About a quarter of the total losses had been recovered and the manipulation resulted in an increased total of about $33.5 million. The 2½ year sentence that had been imposed on Mark Karpelès will not be executed unless he commits a violation in the next 4 years.
The court blamed the founder for bringing “massive harm to the trust of his users” and criticized him for exploiting his knowledge for personal profit:
The charge of electronic record tampering is true and deserves punishment, but there’s no criminal evidence of embezzlement…there is no excuse for the defendant, who is an engineer with expert knowledge, to abuse his status and authority to perform clever criminal acts.
The Mt. Gox incident has gone down in the annals of crypto history as a watershed moment. It brought attention to the security of cryptocurrency exchanges and triggered a crypto winter that continues to remain in investors’ memories.
Nearly $500 million worth of BTC was lost, which at the time amounted to about 850,000 bitcoins and would be worth about $3.3 billion at today’s price.
The Tokyo District Court had previously decided to move Mt. Gox out of bankruptcy and allow the exchange’s assets to be distributed among former customers.