Mt. Gox Was a Ponzi Scheme, CEO In Hot Water - Shocker There | dinbits


WARNING: Contains adult language.

The Arrest

As most of you know by now, Mark Karpeles, was arrested on Saturday (August 1st, 2015), but here's the icing on the cake. He has admitted to "inflating his wallet" as CEO of the now demolished company synonymous with everything that is wrong on earth. I only have only two words to say:


SHOCKER THERE!

If you follow dinbits.com, you know what a fan of Mt. Gox we are. I myself have many thousands of dollars locked up with that wretched excuse for ever being considered any form of legal structure or company. Quite frankly, I'd rather be friends with PayPal than even waste another thought on Mt. Gox, but this one has been a long time coming.

Inside Job

We've pretty much known this was an "inside job" and I have been calling this asshole out since day numero uno (number one). The Japanese police finally figured this out a year later, despite clues and hints repeatedly provided by many of us. Now, finally, they [police] have arrested Mt. Gox former CEO Mark Karpeles. What the hell took so long?

I'll tell you what took so long, technology. The very thing we rely on to speed this shit up was exactly what slowed it down.

It's difficult to ascertain the equivalent fiat value of assets held by any company when it's stored in digital currency unless that company reports accurately (not even required in Japan at the time), and this was almost two years ago, when digital currency was not a well-known thing, and although it is really mainstream now, it is more of a known thing than it was then. I would bet a bitcoin that more than one official assigned to this case in Japan had to ask: "What are bitcoins?"

Ponzi Scheme

We've learned Mt. Gox actually ran out of money months before it announced that it was filing for bankruptcy, in February 2014, and again: Shocker there!


We all started suspecting that out long before the announcement when we were unable to get our money off of the damn exchange. This bit of information is new (not surprisingly however), they allegedly started paying some clients with money drawn from other customers’ accounts.

That's what we call, here in the United States, a Ponzi scheme, and it is very illegal.

Last week, Karpeles was arrested for allegedly "manipulating virtual currency data to pad his personal cash account".

I love the way that is delivered, because it sounds so "possibly not exactly as legal as it could be or should be under other circumstances" when in fact it just means he has been arrested for stealing.

He's admitted it as well, not at first, but now states he did it, because he did do it, we all know he did it, and he needed to just fess up and face the music.

This is not to say he did it all, and is the only individual responsible for the theft of the entire missing amounts, however had he been paying attention, instead of stealing, perhaps he would have taken measures to prevent the rest of it. It is also not to say he isn't either, and may well be the one and only culprit. I doubt it, nobody this stupid could have possibly pulled it off.

I jotted down this little love letter for Mr. Karpeles:
Mark, 
Please sign whatever it is that requires your signature so that you can give people back their money. We are tired of waiting on your ass. 
Your shitty job as CEO set aside, by not fessing up to begin with, you caused thousands of people an even longer period of suffering, myself included.  
To earn any shred of respect, or just to do the right fucking thing, which should be more important, just do it and get it over with, like a bandaide, just rip it right off. Allow the people who trusted you, to get whatever miniscule portion of their money that is left ... back.
You should be banned globally from ever touching another financial document, currency, be it virtual or traditional, asset, or anything that is not your own personal property, and then locked in a box somewhere with you hands tied, so that it can be enforced. 
Most hatefully, 
-dinbits

Is that too harsh? I don't think so, this guy's been living it up on your nickel, but not to worry, I wouldn't waste the price of a stamp on sending this letter since it would do no good.

Realistically, it's out of his hands anyway, [unless] he has funds hidden somewhere, and if that's the case, trust me, they'll find it.

Karpeles is the one who set up Gox, and appointed himself "lead Goxer", in 2011. It became the world’s biggest bitcoin exchange and had it been run properly, what this guy obviously failed to do, it would have been a wonderful thing, and in many ways it was, especially in its time.

The Meltdown

Mt. Gox had roughly ¥3.8 billion ($30.65 million) worth of balance sheet assets as of March 2013, including bitcoins and cash, right about the time the U.S. Department of Homeland Security seized assets of around $5 million kept in U.S. bank accounts.

The US said Gox was ineligible to operate fund transfer services in the United States, which prompted folks in the US to withdraw funds immediately.

So instead of speaking with the United States (that is speculative of course), or obtaining the proper licensing, registrations, or whatever was required, they did nothing and in February 2014, they shut down, melted, was shamed off the map, etc ... we all were there, we know the drill.

Oh Yes, There's More

Additionally, and they better get out the flashlight, Japanese police are investigating funds that may ("may"? Have we learned nothing here?) have been embezzled (¥1.1 billion) to an account of an affiliate company and for the personal use of Mark Karpeles.

Once again, and I leave you with..ahem:

SHOCKER THERE!







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  1. From my experience the ultimate Bitcoin exchange service is YoBit.

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