When Mark Marie Robert Karpelés was born in Chenôve, France, in 1985, his mother Anne had no idea that her son would one day become a luminary in the crypto space.
The young Karpelés quickly developed a passion for computers and was already programming his own little video games at the age of four. It quickly becomes clear: Karpelés is very talented. Despite his IQ of 190, schooling is anything but easy for the young Frenchman.
After graduating from high school in 2003, Karpelés got his first job as a programmer at a local game developer in Paris. He gets bored quickly and starts making software improvements to his employer’s website himself. One day, two years later, while designing a program that exploited customer data without being asked, Karpelés was fired and, on top of that, he was sued for data theft.
After a stopover with the French company Nextway Karpelés decides to emigrate at the age of 24. His love of Japanese culture drives him to Tokyo. Within months, he learned the local language and founded his first business there, which developed websites.
When a customer wanted to pay his bill in Bitcoin in 2010, Karpelés came into contact with cryptocurrency for the first time. The young father of a family is immediately fascinated by the blockchain technology that underpins it and delves into the depths of matter. During his research, he came across a company in Tokyo’s Shinjuku district that already accepts Bitcoin as payment: Mount Goxan online exchange for the fantasy trading card game Magic the gathering.
In March 2011, Karpelés purchased the company and replaced selling trading cards with selling Bitcoin. Mt.Gox is one of the first exchanges to operate such a business model. Because cryptocurrency is also attracting more and more media attention, not only is the number of users of the online trading platform increasing, but the hacks on the site are also increasing. Julien Laglasse, close friend of Karpelés and collaborator of Mt.Gox, recalled that ZDF in time:
The platform was hacked every day. It was like owning a bank full of money and there were always gangsters around trying to rob you.
Mt.Gox loses 400,000 Bitcoins
In June 2011, the attackers succeeded for the first time. They breach the security system and steal 400,000 BTC. Mt.Gox deposit and withdrawal functions are suspended, the website shut down, and the price of Bitcoin drops from $32 to $0.01. Karpelés shuts down for 48 hours and rewrites all site code during that time. He then announces that he will transfer 424,242 BTC to the exchange to regain the lost trust. The measurement is successful. Little by little, his customers are coming back.
Trading on Mt.Gox is booming. The number of users increases, the company grows. Meanwhile, between 70 and 80% of all Bitcoin transactions are handled by Karpelés’ company.
This changes abruptly in February 2014. Mt.Gox is closed. Customer accounts are blocked and again transactions via the platform are not possible. 850,000 bitcoins disappear. As a result, the price drops from $828 to $538. Three weeks after the incident, Karpelés told a press conference that hackers stole the cryptocurrency in an attack.
He resigns from the Bitcoin Foundation, of which he was a founding member. Mt.Gox files for bankruptcy. A week later, the former crypto exchange announced that 200,000 Bitcoin had been found. However, these are still with the insolvency administrator.
Karpelés was arrested by Japanese authorities in 2015. There are two trials against him. On the one hand, he is accused of manipulating Bitcoin prices on Mt.Gox. On the other hand, he would have embezzled funds from the company (approximately 2.6 million US dollars). Finally, after ten months of detention, he was released on bail, but not allowed to leave the country.
In 2019, a Japanese court found him guilty of manipulating Mt.Gox data to inflate the exchange’s holdings by $33.5 million. He received a two-year and six-month suspended sentence. The 34-year-old man is acquitted of the charge of embezzlement: the court concluded that Karpelés had acted “without bad intentions”.
Investors continue to hope for compensation
The same year, the French declared that he wanted to make Japan the first blockchain site. He is involved in the Tokyo crypto company Tristan Technologies Co. as CTO. Together they want to improve blockchain encryption technology. However, not much is known about the company.
Years later, aggrieved investors are still hoping for compensation. In November 2021, hopes were stoked again when the Japanese trustee of the bankrupt Bitcoin exchange launched a return of recovered BTC to victims.
Despite this, years later, Mt.Gox still enjoys cult status in the crypto space, much like its former CEO. His friends and family describe Karpelés as a brilliant computer scientist who, however, always lived a little apart from reality between genius and madness.
This article was previously published in our monthly magazine in August 2021. For more information on a subscription, go here.
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