MtGox bitcoin founder gets suspended sentence for data tampering

In this file photo taken on July 11, 2017 French national Mark Karpeles, former CEO of collapsed Bitcoin exchange MtGox, attends a press conference after his first hearing in Tokyo. (AFP)
Updated 15 March 2019
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MtGox bitcoin founder gets suspended sentence for data tampering

  • Mark Karpeles was convicted for tampering with computer data but acquitted him over embezzlement charges
  • MtGox was shut down in 2014 after 850,000 bitcoins (worth half a billion dollars at that time) disappeared from its virtual vaults

TOKYO: A Japanese court sentenced the former high-flying creator of the MtGox bitcoin exchange to a suspended jail sentence of two and a half years Friday after finding him guilty of data manipulation.
The Tokyo District Court convicted Mark Karpeles, a 33-year-old computer whizz from France, for tampering with computer data but acquitted him over charges of embezzling millions from client accounts.
The sentence was suspended for four years.
In a summary of the ruling, the court said Karpeles had “harmed the users’ trust greatly” by manipulating data and “abused his expertise as an IT engineer and his position and authority.”
Prosecutors had claimed that Karpeles had pocketed some 341 million yen ($3 million) of client’s money and splashed it on a lavish lifestyle. They called for him to serve 10 years behind bars.
However, in throwing out the embezzlement charges, the judge said there was no financial damage done to MtGox and ruled that Karpeles did not intend to cause any damage.
The judge cited an expert opinion that said owners of small and medium enterprises often borrow funds without proper accounting and ruled that the court assumed Karpeles intended to return the money.
Karpeles entered the courtroom wearing a dark suit and black shoes and he bowed politely to the judge. He was motionless after the verdict was read out.
After the sentencing, the judge asked if Karpeles understood the sentence. Karpeles responded simply: “Yes, I did.”
MtGox was shut down in 2014 after 850,000 bitcoins (worth half a billion dollars at that time) disappeared from its virtual vaults.
The scandal left a trail of angry investors, rocked the virtual currency community, and dented confidence in the security of bitcoin.
At one point, MtGox claimed to be handling around 80 percent of all global bitcoin transactions.
During his trial, Karpeles apologized to customers for the company’s bankruptcy but denied both data falsification and embezzlement.
“I swear to God that I am innocent,” Karpeles, speaking in Japanese, told the three-judge panel hearing when his trial opened in 2017.
Karpeles always claimed the bitcoins were lost due to an external “hacking attack” and later claimed to have found some 200,000 coins in a “cold wallet” — a storage device not connected to other computers.
“Most people will not believe what I say. The only solution I have is to actually find the real culprits,” he told reporters his trial hearing in July 2017.
The acquittal on embezzlement came as a surprise as the vast majority of cases that come to trial in Japan end in a conviction.
Karpeles himself said in an interview with French business daily Les Echos on Wednesday that he had little chance of acquittal.
“All I can hope for is a light sentence which will mean I do not have to go back into detention and do forced work,” he said.
The Frenchman was first arrested in August 2015 and, in an echo of another high-profile case against former Nissan chief and compatriot Carlos Ghosn, was re-arrested several times on different charges.
Karpeles eventually won bail in July 2016 — nearly a year after his arrest — paying 10 million yen to secure his freedom pending a trial, which began in July 2017.
During his time on bail, Karpeles has been active on social media — notably voicing doubts about bitcoin and replying to some media questions about conditions in Japanese detention centers.
However, he has largely avoided commenting on his case in detail.
In many ways, the rollercoaster ride of Karpeles has mirrored that of the bitcoin cryptocurrency that made him rich.
At its height in December 2017, the value of a single bitcoin was around $20,000.
It has since slumped and is now worth just under $4,000.

 

 


Tour company Thomas Cook collapses, global bookings canceled

Updated 29 min 37 sec ago

Tour company Thomas Cook collapses, global bookings canceled

  • The bosses of the world’s oldest travel company seek to raise the $250 million they need to keep the company afloat

LONDON: Longtime British tour company Thomas Cook collapsed after failing to secure rescue funding, and travel bookings for its more than 600,000 global vacationers were canceled early Monday.

The British government said the return of the firm’s 150,000 British customers now abroad would be the largest repatriation in its peacetime history. The process began Monday and officials warned that delays are inevitable.

The Civil Aviation Authority said Thomas Cook has ceased trading, its four airlines will be grounded, and its 21,000 employees in 16 countries, including 9,000 in the UK, will lose their jobs. The company several months ago had blamed a slowdown in bookings because of Brexit uncertainty for contributing to its crushing debt burden.

The 178-year-old company had said Friday it was seeking £200 million ($250 million) to avoid going bust and was in weekend talks with shareholders and creditors to stave off failure. The prominent firm, whose airliners were a familiar sight in many parts of the world, also operated around 600 UK travel stores.

The company’s chief executive Peter Fankhauser said, “This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.”

He said a deal had been “largely agreed” but that “an additional facility” requested in the last few days presented an insurmountable challenge but provided no further details.

“I would like to apologize to our millions of customers, and thousands of employees,” he said in a statement.

Britain’s CAA said it had arranged an aircraft fleet for the complex British repatriation effort, which is expected to last two weeks.

“Due to the significant scale of the situation, some disruption is inevitable, but the Civil Aviation Authority will endeavor to get people home as close as possible to their planned dates,” the aviation authority said in a statement.

Describing the repatriation plan, British Transport Secretary Grant Shapps said dozens of charter planes, from as far afield as Malaysia, had been hired to fly customers home free of charge. He said hundreds of people were staffing call centers and airport operations centers.

“The task is enormous, the biggest peacetime repatriation in UK history. So, there are bound to be problems and delays,” he said.

A website set up by the aviation authority to aid the firm’s customers crashed shortly after the company collapse was announced.

Unions representing the Thomas Cook staff had urged the British government to intervene to prop up Thomas Cook to protect jobs and the traveling public.

Most of Thomas Cook’s British customers are protected by the government-run travel insurance program, which makes sure vacationers can get home if a British-based tour operator fails while they are abroad.

Thomas Cook, which began in 1841 with a one-day train excursion in England and now operates in 16 countries, has been struggling over the past few years. It only recently raised £900 million ($1.12 billion), including receiving money from leading Chinese shareholder Fosun.

An estimated 1 million future travelers will find their bookings for upcoming holidays canceled. They are likely to receive refunds under the terms of the government’s travel insurance plan.

Officials plan to post details on how to receive refunds later on Monday. Travelers holding reservations with Thomas Cook were told not to go to the airport because all flights had been canceled.

An earlier repatriation plan following the 2017 collapse of Monarch Airlines cost the government about 60 million pounds. The Thomas Cook effort is much larger and likely to be far more costly.

In May, the company reported a debt burden of 1.25 billion pounds and cautioned that political uncertainty related to Britain’s scheduled departure from the European Union at the end of October had hurt demand for summer holiday travel. Heat waves over the past couple of summers in Europe have also led many people to stay at home, while higher fuel and hotel costs have weighed on the travel business.

The company’s troubles were already affecting those traveling under the Thomas Cook banner.

A British vacationer told BBC radio on Sunday that the Les Orangers beach resort in the Tunisian town of Hammamet, near Tunis, demanded that guests who were about to leave pay extra money for fear it wouldn’t be paid what it is owed by Thomas Cook.

Ryan Farmer, of Leicestershire, said many tourists refused the demand, since they had already paid Thomas Cook, so security guards shut the hotel’s gates and “were not allowing anyone to leave.”

It was like “being held hostage,” said Farmer, who is due to leave Tuesday. He said he would also refuse to pay if the hotel asked him.

The Associated Press called the hotel, as well as the British Embassy in Tunis, but no officials or managers were available for comment.