Former Mt. Gox CEO Mark Karpeles is a free man after a court acquitted him of embezzlement charges. Japanese prosecutors had filed an indictmentagainst him alleging misappropriation of funds from Mt. Gox accounts and manipulating company records. The prosecution was seeking a 10-year prison sentence.
The court found Karpeles guilty of manipulating records. Evidence brought forth revealed that he inflated Mt. Gox exchange holdings by $33.5 million. Transactional records indicated that he used the money to invest in other ventures including a 3D printing business.
The embezzlement charges, however, were dismissed due to insufficient evidence. Mt. Gox did not have a reasonable accounting system in place during its heyday when executives borrowed money from the agency.
The court, therefore, ruled that it would be impossible to determine exact figures in the company’s accounts, subsequently making it difficult to come up with evidence supporting the claim.
It also declared that the fund transfers were not illegal but went against the company’s best interests. Among the issues brought to the foreground by prosecutors was Karpeles decision to use Mt. Gox funds to buy a 3D printing business. The court saw the venture as potentially profitable to the firm and found it reasonable that he decided to use the funds in this way.
Karpeles was handed a two and a half year prison sentence with a four-year suspension. This means that Karpeles will not be serving any jail time unless he commits a crime within the next four years. His sentence was suspended because the former Mt. Gox exec had no prior criminal record.
The ruling came as a surprise to many observers because Japan has a remarkably high conviction rate of 99 percent. This puts Karpeles in the one percent club. In addition to embezzlement, prosecutors had also lodged an aggravated breach of trust case against him, but these charges were thrown out as well.
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