In 2014, the collapse of the cryptocurrency exchange Mt. Gox was a watershed moment in the history of cryptocurrencies worldwide. It shook the faith a large body of investors had reposed in Bitcoin, the most popular of the digital currencies.
The CEO of Mt. Gox, Mark Karpeles was then accused of being responsible for the collapse of the exchange and loss of millions of dollars’ worth cryptocurrencies. Karpeles was arrested and tried in a Tokyo court. The court has now sentenced Mark Karpeles but kept the implementation of the two-year jail sentence in abeyance for four years.
The Loss to Investors Was Huge
The year 2014 was when Bitcoin was riding a wave of sorts. Japanese citizens took to Bitcoin in a big way and the Mt. Gox exchange presided over by Karpeles was trading volumes of the currency on a daily basis. The only place the investors could keep their investments was with the exchange in digital wallets.
But one day the exchange got cleaned out supposedly by hackers who vanished with 850,000 Bitcoins. Given the rates at which the cryptocurrency was being traded then, it was valued at close to half a billion US Dollars. The exchange had $28 million in its bank accounts. This amount too was stolen in this heist.
There were thousands of investors who lost their entire life’s fortunes. The Mt. Gox collapse had many serious consequences, some still felt today.
CEO Was the Prime Suspect
The immediate needle of suspension was pointed at Mark Karpeles, a French national. The Japanese government stepped in to prosecute Karpeles and bring him to justice. The prosecution accused him of being involved in the collapse of the exchange and in the embezzlement of the money. They wanted the court to send him to prison for 10 years.
Mark Karpeles contested the charges and said he was innocent. He said it was the work of unknown hackers and he had no role in it.
Court Finds Him Partly Guilty
The Japanese court that tried Karpeles has said in its judgement that it finds the Mt. Gox CEO innocent of the embezzlement charges. But he has been found guilty of tampering with the electronic records of the exchange.
He will be watched over the next four years and if there is no further crime committed by him, the sentence may be cancelled.
Far-Reaching Effects of the Collapse
There are reasons to believe that the hacking of Mt. Gox and its collapse were responsible for the downward direction Bitcoin and other cryptocurrencies took. They are yet to recover. Even as the prices of Bitcoin were fluctuating in the exchanges, it was rumored that around 60,000 Bitcoins which were recovered from Mt. Gox after the collapse, were released into the market, and that resulted in a further decline of prices.