Mark Karpeles, the CEO of Mt. Gox, was found guilty of tampering with financial records and received a suspended sentence, meaning that he will most likely avoid jail time.

Cryptocurrency enthusiasts understandably lament the number of exchange hacks that have occurred over the last couple of years. The potential profit for criminals can be huge in breaching the security of crypto exchanges, which is evident that just two hacker groups netted a cool billion between them for their illicit actions.

However, one exchange hack stands above all others – Mt. Gox. Once the single largest Bitcoin exchange in the world, handling over 70 percent of all BTC transactions, its hack in 2014 led to a long series of legal maneuverings. Now there is some closure as CEO Mark Karpeles has been found guilty (and not guilty) in a Japanese court.

The Fall of Mt. Gox

Mt. Gox was originally created to allow the trading of Magic: The Gathering cards, but founder Jed McCaleb became interested in Bitcoin and relaunched the site as a crypto trading venture.

In 2014, the exchange announced that 850,000 bitcoins had gone missing. At the time, the coins were worth $450 million (now they would be worth $3.37 billion). Since that time, roughly 200,000 bitcoins have been found.

The exchange shut down in February 2014, ushering in a slew of legal actions as users sought to get compensation. A court-appointed trustee has periodically liquidated vast amounts of Bitcoin, a move that many critics say depressed the market.

One result of the Mt. Gox fiasco was that CEO Mark Karpeles was arrested by Japanese law enforcement in 2015. He was charged with embezzlement and fraud, as well as manipulating records to pad the balance of an account.

Verdict Handed Down

After all the litigation, a verdict was finally handed down to the now 33-year-old Karpeles. The court ruled him not guilty of embezzlement, saying he acted without ill intent. However, he was convicted of tampering with financial records as he both played around with account numbers as well as mixing his personal finances with that of the exchange.

The court handed down a sentence of 30 months (prosecutors wanted 10 years), but the sentence is suspended. If Karpeles stays out of trouble for four years, then he’ll do no prison time at all.

In the verdict, the court said:

The charge of electronic record tampering is true and deserves punishment, but there’s no criminal evidence of embezzlement.

However, it added that Karpeles is responsible for “massive harm to the trust of his users” and that “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 legal woes for Mark Karpeles are not truly over. A lawsuit in Illinois has been given the okay to move ahead as a recent ruling states:

Although neither Karpeles nor Mt. Gox directed advertising specifically toward Illinois or even the United States, users could view information touting the exchange’s sophistication and security on Mt. Gox’s website. Greene and Motto, both Illinois residents, relied on those representations when they created their Mt. Gox accounts in 2012 and early 2014, respectively.

Still, Mark Karpeles has to feel good about this verdict. Japan boasts an insane 99 percent conviction rate, and the country is known for its severe treatment of prisoners. Karpeles said he was interrogated for months without having access to a lawyer. He also maintains he was coerced into signing a confession. Overall, he described his legal odyssey in Japan as a “nightmare,” citing the fact he lost 77 pounds during his incarceration of 11 months.

What do you think about this verdict for the Mt. Gox CEO? Let us know in the comments below.

Images courtesy of Bloomberg, Pxhere, and Pixabay.