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
0

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.

 

 


Foreign investors hope India dials back policy shocks after Modi win

Updated 24 May 2019
0

Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

Opinion

This section contains relevant reference points, placed in (Opinion field)

“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”