9 ms·

Mark Karpeles Gets Suspended Jail Term

98 points by T-A 8y ago

topmonk 8y ago
A happy result for all involved. Karpeles was appropriately punished and all investors are being made whole. Most bankruptcies don't end that way.
- viraptor 8y ago
  Not quite. Creditors get back all the fiat which was on their account. But they will not get a full refund of BTC. There's just not enough to distribute. Also it's all in the future. The distribution had not happened yet and many details have not been published.
  - topmonk 8y ago
    Yes, but, would all the people who deposited BTC realistically would have not cashed out before now? Most likely a lot would have cashed out after a 2x or 3x return on their investment. They are really lucky as it is.
    - h1d 8y ago
      The decision was made solely by the trustee for all the benefit but yet people call him the Tokyo whale who crashed the market in 2018. (Which is BS considering it was about to explode anyway when the price went up 20x.)
- deleted 8y ago
  [deleted]
- jasonzemos 8y ago
  I'm still out plenty of money thanks to Karpeles that I'll never see again. Not a happy result for me, sorry, no.
  - inuhj 8y ago
    Same, not counting the money I lost due to his scam trading bot that was front running the market. I think 5 years would be a light sentence here.
    - icebraining 8y ago
      I'm out of the loop, why do you say he was front-running the market? EDIT: I found https://twitter.com/grace_za/status/1016688636304265216 https://twitter.com/grace_za/status/1016688636304265216
  - stouset 8y ago
    You don’t consider your own lack of caution to be a component in this loss?
    - watwut 8y ago
      That is irrelevant offtopic. Just because it is possible to figure out fraud does not make it any less fraud.
  - topmonk 8y ago
    I said being made whole. Justice takes time.
    - GenericsMotors 8y ago
      In this case it will probably tend to infinity.
      - topmonk 8y ago
        Why do you say that? They have $630 million in BTC tied up right now.
- colek42 8y ago
  Really?, they still have about .5 Bitcoin of mine
- Nanocurrency 8y ago
  I'm not being made whole. All investors that found out in time about the recovery process are being made whole; the rest of us - who haven't applied - are left with nothing.
MotiveMe 8y ago
As someone that still has Bitcoin tied up in the Gox civil rehabilitation suit, I feel justice is adequately served here. Karpeles was clearly in over his head, and made terrible decisions after the hacking, but I don’t believe imprisonment would serve any meaningful purpose, and I do believe he feels genuine remorse for his actions.
- ckastner 8y ago
  > but I don’t believe imprisonment would serve any meaningful purpose Sure it would! It would serve as a deterrent. Some people shouldn't be handling hundreds of millions of USD. Karpeles' operation wasn't just unprofessional finance, it was a complete shit-show. The court should have sent the message to others to not attempt something as complicated and risk-laden as operating a financial exchange without even the slightest bit of know-how necessary to do that. Startup culture can be great, but it's amazingly dangerous when operating certain trades or industries.
  - joecool1029 8y ago
    > Sure it would! It would serve as a deterrent. Some people shouldn't be handling hundreds of millions of USD. I don't think Mark ever expected to handle that kind of money. It just sort of happened. One of the things usually needed to prove a crime was committed was that there was the intent to commit it. > Startup culture can be great, but it's amazingly dangerous when operating certain trades or industries. Mark's about the furthest thing from a startup bro. Honestly, I got the vibe he started MtGox as a hobby that happened to make money. A lot of it doesn't make sense from a business planning standpoint. Bet you didn't know the parent company of MtGox was named after his cat and served as a hosting company and domain registrar. He's a gentoo nerd that had a pet project win the lottery. There's far more to question about what the exchange had happen before he took it over, but I suppose jed won't talk about that. To be fair though the year he spent in jail probably added some years to his life. While I doubt it was great for his mental health, it did wonders for getting his weight under control.
    - wcoenen 8y ago
tomc1985 8y ago
I used to buy M:TG cards at Mt.Gox back in the day. It was really confusing when I heard they were now a bitcoin exchange
- Thorrez 8y ago
  Several places online claim it never operated as a M:TG exchange, that was just a plan that never was executed. All the archive.org snapshots seem to show a non-functional site. https://www.wired.com/2014/03/bitcoin-exchange/ https://www.wired.com/2014/03/bitcoin-exchange/ https://www.reddit.com/r/Bitcoin/comments/1bzysz/til_mtgox_was_magic_the_gathering_online_exchange/c9brjl0/ https://www.reddit.com/r/Bitcoin/comments/1bzysz/til_mtgox_w... https://bitcointalk.org/index.php?topic=4412667.0 https://bitcointalk.org/index.php?topic=4412667.0 https://web.archive.org/web/20070501000000*/http://mtgox.com https://web.archive.org/web/20070501000000*/http://mtgox.com
- RL_Quine 8y ago
  Nonsense. The site never meaningfully acted in this way, it was at best a tech demo and a coming soon homepage.
- Kiro 8y ago
  You're lying. Why?
  - deleted 8y ago
    [deleted]
- miles 8y ago
  To those saying you could not have traded cards on Mt. Gox: "sometime around late 2007, the service went live for approximately three months before McCaleb moved on to other projects" https://en.wikipedia.org/wiki/Mt._Gox#Founding_(2006-10) https://en.wikipedia.org/wiki/Mt._Gox#Founding_(2006-10) Gwern: "we know the mtgox.com domain had a landing page discussing a forthcoming Magic card trading site (because a 2007 page is in the Internet Archive), but we can't find any evidence that there was any actual trading going on. Did anyone ever actually trade card for card or money for card on Mtgox.com?" McCaleb: "yeah they did" https://www.gwern.net/docs/bitcoin/2014-mccaleb https://www.gwern.net/docs/bitcoin/2014-mccaleb
zubairq 8y ago
Having lost over 350 Bitcoins myself, I would say this is a fair verdict. Mark Karpeles was in over his head, that is true, but so are most people in startups or companies that end up hurting people or losing their money. If we were to start jailing people who lost other people's money then 95% of all people who take investment would be in jail.
- pnongrata 8y ago
  Big Banks and Wall St. are glad you think like that.
  - zubairq 8y ago
    I wasn't talking about big banks or wall street. I was talking about startups who take investors money, and often totally mismanage their companies. They usually don't do it to cheat investors, they are just over optimistic, and not experienced enough. What I guess you are referring to is when big banks and wall street deliberately cheat and take investors money. And I think that should require people going to jail.
    - pnongrata 8y ago
      Optimistic and/or naive people are not exempt from being held accountable. Regarding this particular case, Karpeles was handling lots of money and clearly 'cooked the books' for his own advantage. We know that. Also, from my own personal experience, startup culture is full of lies and deceit, and investors are not always big money firms looking to land its next unicorn exit. Regular people also invest in many startups. There can't be special rules is all I'm saying. We need to improve 'startup culture' and one of the ways of doing that is by holding people accountable.
      - zubairq 8y ago
        I agree with most of this, especially about the deceit and lies, even with a lot of the fast growing startups like Facebook and Google. There are also a huge number of honest startups, but we don't hear much in the news about them as they just keep going along making a couple of million dollars a year for their founders. It is hard to hold people accountable as the legal system doesn't support this, even here in Europe. I don't know how to improve startup culture myself, except maybe to act with integrity in my own work, and to make sure that I do my homework better when I evaluate a startup And yes, regular people generally get wiped out when they invest in startups, it happened to me a few times in the past too, but I wanted Unicorn exits too the same as the VC firms :)
kabwj 8y ago
So he’s home free? If I were him, I’d be afraid that someone might want to physically harm me.
- Mengkudulangsat 8y ago
  He is, all the time, which he shared on his Reddit AMA some time ago. Might be worse than the actual sentence.
shawnps 8y ago
For anyone interested in learning more, I highly recommend this episode of the Darknet Diaries podcast: https://darknetdiaries.com/episode/9/ https://darknetdiaries.com/episode/9/
j-c-hewitt 8y ago
Someone should put together a crash weight loss program that simulates being convicted in the Japanese criminal justice system modeled on this.
jaequery 8y ago
There have been other exchanges getting hacked after him. How come none of them get jailed time and only Mark?
jron 8y ago
Great interview with Mark about the start and demise of MtGox: https://www.youtube.com/watch?v=7cUBFXf678o https://www.youtube.com/watch?v=7cUBFXf678o

98 points by T-A 8y ago

A happy result for all involved. Karpeles was appropriately punished and all investors are being made whole. Most bankruptcies don't end that way.

viraptor 8y ago
Not quite. Creditors get back all the fiat which was on their account. But they will not get a full refund of BTC. There's just not enough to distribute. Also it's all in the future. The distribution had not happened yet and many details have not been published.
- topmonk 8y ago
  Yes, but, would all the people who deposited BTC realistically would have not cashed out before now? Most likely a lot would have cashed out after a 2x or 3x return on their investment. They are really lucky as it is.
  - h1d 8y ago
    The decision was made solely by the trustee for all the benefit but yet people call him the Tokyo whale who crashed the market in 2018. (Which is BS considering it was about to explode anyway when the price went up 20x.)
deleted 8y ago
[deleted]
jasonzemos 8y ago
I'm still out plenty of money thanks to Karpeles that I'll never see again. Not a happy result for me, sorry, no.
- inuhj 8y ago
  Same, not counting the money I lost due to his scam trading bot that was front running the market. I think 5 years would be a light sentence here.
  - icebraining 8y ago
    I'm out of the loop, why do you say he was front-running the market? EDIT: I found https://twitter.com/grace_za/status/1016688636304265216 https://twitter.com/grace_za/status/1016688636304265216
- stouset 8y ago
  You don’t consider your own lack of caution to be a component in this loss?
  - watwut 8y ago
    That is irrelevant offtopic. Just because it is possible to figure out fraud does not make it any less fraud.
- topmonk 8y ago
  I said being made whole. Justice takes time.
  - GenericsMotors 8y ago
    In this case it will probably tend to infinity.
    - topmonk 8y ago
      Why do you say that? They have $630 million in BTC tied up right now.
colek42 8y ago
Really?, they still have about .5 Bitcoin of mine
Nanocurrency 8y ago
I'm not being made whole. All investors that found out in time about the recovery process are being made whole; the rest of us - who haven't applied - are left with nothing.

MotiveMe 8y ago

As someone that still has Bitcoin tied up in the Gox civil rehabilitation suit, I feel justice is adequately served here. Karpeles was clearly in over his head, and made terrible decisions after the hacking, but I don’t believe imprisonment would serve any meaningful purpose, and I do believe he feels genuine remorse for his actions.

ckastner 8y ago
> but I don’t believe imprisonment would serve any meaningful purpose Sure it would! It would serve as a deterrent. Some people shouldn't be handling hundreds of millions of USD. Karpeles' operation wasn't just unprofessional finance, it was a complete shit-show. The court should have sent the message to others to not attempt something as complicated and risk-laden as operating a financial exchange without even the slightest bit of know-how necessary to do that. Startup culture can be great, but it's amazingly dangerous when operating certain trades or industries.
- joecool1029 8y ago
  > Sure it would! It would serve as a deterrent. Some people shouldn't be handling hundreds of millions of USD. I don't think Mark ever expected to handle that kind of money. It just sort of happened. One of the things usually needed to prove a crime was committed was that there was the intent to commit it. > Startup culture can be great, but it's amazingly dangerous when operating certain trades or industries. Mark's about the furthest thing from a startup bro. Honestly, I got the vibe he started MtGox as a hobby that happened to make money. A lot of it doesn't make sense from a business planning standpoint. Bet you didn't know the parent company of MtGox was named after his cat and served as a hosting company and domain registrar. He's a gentoo nerd that had a pet project win the lottery. There's far more to question about what the exchange had happen before he took it over, but I suppose jed won't talk about that. To be fair though the year he spent in jail probably added some years to his life. While I doubt it was great for his mental health, it did wonders for getting his weight under control.
  - wcoenen 8y ago

tomc1985 8y ago

I used to buy M:TG cards at Mt.Gox back in the day. It was really confusing when I heard they were now a bitcoin exchange

Thorrez 8y ago
Several places online claim it never operated as a M:TG exchange, that was just a plan that never was executed. All the archive.org snapshots seem to show a non-functional site. https://www.wired.com/2014/03/bitcoin-exchange/ https://www.wired.com/2014/03/bitcoin-exchange/ https://www.reddit.com/r/Bitcoin/comments/1bzysz/til_mtgox_was_magic_the_gathering_online_exchange/c9brjl0/ https://www.reddit.com/r/Bitcoin/comments/1bzysz/til_mtgox_w... https://bitcointalk.org/index.php?topic=4412667.0 https://bitcointalk.org/index.php?topic=4412667.0 https://web.archive.org/web/20070501000000*/http://mtgox.com https://web.archive.org/web/20070501000000*/http://mtgox.com
RL_Quine 8y ago
Nonsense. The site never meaningfully acted in this way, it was at best a tech demo and a coming soon homepage.
Kiro 8y ago
You're lying. Why?
- deleted 8y ago
  [deleted]
miles 8y ago
To those saying you could not have traded cards on Mt. Gox: "sometime around late 2007, the service went live for approximately three months before McCaleb moved on to other projects" https://en.wikipedia.org/wiki/Mt._Gox#Founding_(2006-10) https://en.wikipedia.org/wiki/Mt._Gox#Founding_(2006-10) Gwern: "we know the mtgox.com domain had a landing page discussing a forthcoming Magic card trading site (because a 2007 page is in the Internet Archive), but we can't find any evidence that there was any actual trading going on. Did anyone ever actually trade card for card or money for card on Mtgox.com?" McCaleb: "yeah they did" https://www.gwern.net/docs/bitcoin/2014-mccaleb https://www.gwern.net/docs/bitcoin/2014-mccaleb

zubairq 8y ago

Having lost over 350 Bitcoins myself, I would say this is a fair verdict. Mark Karpeles was in over his head, that is true, but so are most people in startups or companies that end up hurting people or losing their money. If we were to start jailing people who lost other people's money then 95% of all people who take investment would be in jail.

pnongrata 8y ago
Big Banks and Wall St. are glad you think like that.
- zubairq 8y ago
  I wasn't talking about big banks or wall street. I was talking about startups who take investors money, and often totally mismanage their companies. They usually don't do it to cheat investors, they are just over optimistic, and not experienced enough. What I guess you are referring to is when big banks and wall street deliberately cheat and take investors money. And I think that should require people going to jail.
  - pnongrata 8y ago
    Optimistic and/or naive people are not exempt from being held accountable. Regarding this particular case, Karpeles was handling lots of money and clearly 'cooked the books' for his own advantage. We know that. Also, from my own personal experience, startup culture is full of lies and deceit, and investors are not always big money firms looking to land its next unicorn exit. Regular people also invest in many startups. There can't be special rules is all I'm saying. We need to improve 'startup culture' and one of the ways of doing that is by holding people accountable.
    - zubairq 8y ago
      I agree with most of this, especially about the deceit and lies, even with a lot of the fast growing startups like Facebook and Google. There are also a huge number of honest startups, but we don't hear much in the news about them as they just keep going along making a couple of million dollars a year for their founders. It is hard to hold people accountable as the legal system doesn't support this, even here in Europe. I don't know how to improve startup culture myself, except maybe to act with integrity in my own work, and to make sure that I do my homework better when I evaluate a startup And yes, regular people generally get wiped out when they invest in startups, it happened to me a few times in the past too, but I wanted Unicorn exits too the same as the VC firms :)

kabwj 8y ago

So he’s home free? If I were him, I’d be afraid that someone might want to physically harm me.

Mengkudulangsat 8y ago
He is, all the time, which he shared on his Reddit AMA some time ago. Might be worse than the actual sentence.

shawnps 8y ago

For anyone interested in learning more, I highly recommend this episode of the Darknet Diaries podcast: https://darknetdiaries.com/episode/9/ https://darknetdiaries.com/episode/9/

j-c-hewitt 8y ago

Someone should put together a crash weight loss program that simulates being convicted in the Japanese criminal justice system modeled on this.

jaequery 8y ago

There have been other exchanges getting hacked after him. How come none of them get jailed time and only Mark?

jron 8y ago

Great interview with Mark about the start and demise of MtGox: https://www.youtube.com/watch?v=7cUBFXf678o https://www.youtube.com/watch?v=7cUBFXf678o