Mt. Gox Likely Goes to Jail

Earlier today, the Cointelegraph.com reported on a couple of Australians poised to take up legal action against Mt Gox.

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Mt. Gox Likely Goes to Jail

Earlier today, the Cointelegraph.com reported on a couple of Australians poised to take up legal action against Mt Gox. 

On the other side of the world, the owner of the doomed Mt. Gox, Mark Karpeles, was summoned to court in Dallas this month in the latest stage of the search for money and answers resulting from the disappearance of over $400 million of its customers’ funds. 


A US lawyer has even stated that Karpeles, far from making it to Texas, would likely be arrested immediately upon arrival in the US. Roger Townsend, speaking at the Inside Bitcoins in New York, said, 

“I assume [Karpeles] would be arrested or a person of interest”. 

(Somewhere) between a rock and a hard place

The net appears to be closing in on Karpeles in the US, Townsend representing Seattle-based firm Coinlab, whose deal with Mt. Gox to supply bitcoins to the North American market fell through, resulting in a $75million lawsuit in 2013. Two further ex-Mt. Gox customers, Gregory Greene and Joseph Lack, are suing for approximately $65,000 in lost currency, accusing Mt.Gox and Karpeles of fraud.

Townsend added that in addition to the lawsuits, the FBI would be interested in questioning Karpeles about his role in the alleged fraud conducted at Mt. Gox and money laundering at the now-infamous Silk Road, together with his “friend” Charlie Shrem, whom they already arrested. He said there may even be talk of a grand jury indictment.

Karpeles, who filed for bankruptcy in Japan and the US, has since disappeared from the radar, although his defence lawyer Eric Macey told the Dallas court where case was filed that he is currently in Japan and has not been in the US at all.  

However, prosecution lawyers suspect that Karpeles will not be making his US debut any time soon. Despite U.S. Bankruptcy Judge Stacey Jernigan allegedly declaring that “my God, he is going to get himself over here”, it is possible that someone else will appear in his stead dubbed Mt. Gox’s main player. 

A way forward?

The farce continues with Gigaom reporting a collaboration of Bitcoin stakeholders attempting to salvage Mt. Gox in February approached an unnamed source who rejected their request, adding Karpeles is an “imbecile” who landed himself in the present situation through what Gigaom terms “covering up earlier accounting irregularities, and then continuing to do so until he was in over his head”.

Meanwhile, since filing for bankruptcy in the US and Japan, lawyers have been searching the entire world for traces of the missing funds, so far without success; the two cases mean that the search lacks common jurisdiction.

However, Townsend has indicated that there is a possibility that the funds “could be found”.

As such, experts are cautious of gambling on future developments, especially with regard to the retrieval of Mt. Gox’s “missing” funds. One source said that “while anyone can speculate about the outcome of a global search for the funds, it is the fate of Karpeles which could have the big knock-on effect for crypto’s reputation among the general populace.”

The CoinTelegraph will continue to report on developments as they arise.


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