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.

 

 


Pakistan receives $2.2 bn loan from China to stabilize economy

Updated 7 min 25 sec ago
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Pakistan receives $2.2 bn loan from China to stabilize economy

  • Chinese loan boosts foreign exchange reserves to around $11 billion
  • Currency reserves remain under constant pressure due to increasing foreign debt obligations

KARACHI: Pakistan on Monday received a $2.2 billion loan from staunch ally China to stabilize high fiscal and current account deficits, raising the country’s foreign exchange reserves to around $11 billion.
The move comes as Pakistan, which has opened talks with the International Monetary Fund about a possible bailout, faces a struggle to avoid a balance of payments crisis that has left it with growing debts and dwindling foreign exchange reserves.
“Yes we have received $2.2 billion from the China today,” Abid Qamar, a spokesman for the State Bank of Pakistan (SBP) told Arab News.
In November last year, China promised to support Pakistan’s economy following a meeting in Beijing between Chinese Premier Li Keqiang and Pakistani Prime Minister Imran Khan but the exact amount of the loan package was not announced.
“The inflow of Chinese financial assistance will improve foreign exchange reserves and ensure balance of payment stability,” Dr. Khaqan Hassan Najeeb, a spokesperson for the finance ministry, said.
Central bank data for up until March 15, 2019 shows that with the injection of the Chinese loan, foreign exchange reserves will increase to around $11 billion and total liquid reserves to around $17.9 billion.
Pakistan has been searching for investment from friendly countries since the government of Prime Minister Imran Khan took office in August. Last year, both Saudi Arabia and the United Arab Emirates also offered Islamabad loan packages of $3 billion. Saudi Arabia offered an additional $3 billion for import of oil on differed payments.  
But despite the foreign inflows, currency reserves remain under constant pressure due to increasing foreign payment obligations. The rupee traded at 140.40 against the US dollar in the interbank market on Monday as compared to 140.36 on Friday.
“There was no impact of the Chinese inflows today on the exchange rate but it could be on Tuesday,” Zafar Paracha, General Secretary of Exchange Companies Association of Pakistan, told Arab News. “Uncertainty about IMF is one of the reasons. Despite foreign inflows, currency reserves are continuously falling.”
Pakistan’s net international reserves also continue to deteriorate on the back of high debt repayments. Over the next twelve months, Pakistan has to pay $14.6 billion in debt servicing including $12.8 billion as principal repayment and $1.8 billion as interest, according to Arif Habib Limited research.