Mark Karpelès.

From web host to bitcoin exchange

Mark Karpelès, a French programmer, moved to Japan in 2009 and founded a web-hosting company there, Tibanne, named after his cat. Online he went by MagicalTux. In 2010 a customer asked whether he could pay for hosting in bitcoin, and Karpelès agreed. “I was probably one of the first companies to implement Bitcoin payments back in 2010,” he told Bitcoin Magazine in 2025.⁠^[3][2][1]

In early 2011 he bought Mt. Gox, a bitcoin exchange: a website where people swap ordinary money for bitcoin and leave their coins in its care. Jed McCaleb had started it the summer before, and sold it to Karpelès and Tibanne on or about 3 February, McCaleb later said in a sworn statement. Announcing the handover on the Bitcoin forum that March, McCaleb wrote that MagicalTux had “much more experience with web programming, system administration and integrating with banks and other payment processors than I do.”⁠^[5][4]

Trouble came with it. Karpelès says 80,000 bitcoins were stolen between his signing the contract and getting access to the server; McCaleb has said the site “already belonged to him” by then. In June 2011 someone broke into an administrator account McCaleb had kept to check his share of the fees, gave himself a large number of bitcoins and sold them, driving the price on Mt. Gox down to a cent. “The truth is that Mt. Gox was unprepared for Bitcoin’s explosive growth,” the company said in its apology.⁠^[1][6][7]

It kept growing all the same. By April 2013 Mt. Gox handled 70% of all bitcoin trades, by one analyst’s count reported by Wired, and Karpelès sat on the first board of the Bitcoin Foundation, a non-profit set up in 2012 to promote bitcoin, with Gavin Andresen and Charlie Shrem. In May and June 2013 US agents seized about $5 million from the accounts of a Mt. Gox subsidiary, which, their warrant said, was not registered as a money services business.⁠^[8][9][10]

US investigators hunting “Dread Pirate Roberts”, the anonymous leader of the drug market Silk Road, also looked at Karpelès. The Baltimore office “later abandoned the theory” that he was the man, the US appeals court said in the case of Ross Ulbricht, Silk Road’s creator. Karpelès barred users linked to drug buying on Silk Road, Bitcoin Magazine reported: “If you’re going to buy drugs with Bitcoin, in a country where drugs are illegal, you shouldn’t.”⁠^[11][1]

The collapse

On 7 February 2014 Mt. Gox paused all bitcoin withdrawals. Three days later it blamed “transaction malleability”, a flaw that let a third party change a payment’s ID after it was sent, so that coins that had arrived could be made to look as if they had not. On 25 February it shut its website.⁠^[12][13][14]

On 28 February the company asked the Tokyo District Court for civil rehabilitation, a Japanese court process for insolvent companies. It owed about ¥6.5 billion in current debts and had about ¥3.8 billion in assets. It blamed “illegal access through the abuse of a bug in the bitcoin system”: about 750,000 bitcoins belonging to customers and 100,000 of its own had disappeared, and about ¥2.8 billion of customers’ cash was missing too. Karpelès bowed in apology to reporters. “We had weaknesses in our system, and our bitcoins vanished,” he said. “I feel deeply sorry for what has happened.”⁠^[14][15][16]

On 20 March Mt. Gox said it had found 199,999.99 bitcoins in an old-format wallet used before June 2011, which cut the missing total to about 650,000. The court refused the rehabilitation request, and on 24 April 2014 it put the company into bankruptcy and appointed a lawyer, Nobuaki Kobayashi, as trustee to manage what was left. Karpelès lost control of its assets.⁠^[17][18]

Where the bitcoins went

How so many coins could vanish became the central question. In 2015 WizSec, a group of bitcoin security specialists, traced the losses to Mt. Gox’s hot wallet, the coins it kept online to pay out withdrawals. “Most or all of the missing bitcoins were stolen straight out of the MtGox hot wallet over time, beginning in late 2011,” it concluded. “As a result, MtGox was technically insolvent for years (knowingly or not).”⁠^[19]

US prosecutors later put names to it. In 2017 they charged Alexander Vinnik, a Russian who ran the exchange BTC-e, alleging that he “obtained funds from the hack of Mt. Gox and laundered those funds”. Vinnik pleaded guilty in 2024 to conspiring to launder money through BTC-e; the Justice Department’s announcement of his plea did not mention Mt. Gox. In February 2025 he was freed in a prisoner exchange with Russia. “It doesn’t feel like justice has been served,” Karpelès said. In June 2023 the Justice Department also charged two other Russians, Alexey Bilyuchenko and Aleksandr Verner, with conspiring to launder about 647,000 bitcoins stolen from Mt. Gox from September 2011. Its announcement did not say whether either man was in custody.⁠^{[20][22][23][1][21]}

Others put more of the blame on Mt. Gox itself. As it failed, Kenji Saito, a researcher at Keio University, said transaction malleability was “too small to shut down one of the largest bitcoin exchanges in the world”. “Rather, it must be that Mt. Gox has committed something unfaithful to its customers,” he said. Karpelès has said the malleability thefts were real but “nowhere near” the amounts taken by Vinnik or those working with him, and in 2018 he accepted his part: “the methods I chose to try to get MtGox out of its trouble ended up being insufficient, insufficiently executed, or plain wrong.”⁠^[16][24]

Arrest and trial

Japanese police arrested Karpelès on 1 August 2015 on suspicion of falsifying data in Mt. Gox’s computer system to add $1 million to an account, the BBC reported. Three weeks later they re-arrested him on suspicion of embezzling about ¥321 million of customers’ money, which he denied. He spent eleven and a half months in custody, more than six of them in solitary confinement, before he was released on bail on 14 July 2016. “It’s still quite painful,” he said in 2025.⁠^{[25][26][27][1]}

His trial opened on 11 July 2017. “I swear to God that I am innocent,” he told the three judges, and prosecutors asked for ten years in prison. On 15 March 2019 the Tokyo District Court found him guilty of tampering with computer data and acquitted him of embezzlement and breach of trust. According to Sankei Shimbun, the court found that he had made fictitious bitcoin trades to stave off the company’s collapse, and altered its records 21 times in 2013 to hide them, inflating account balances by $33.5 million. He had “harmed the users’ trust greatly”, the court said, as AFP reported, but had caused Mt. Gox no financial damage. It sentenced him to two and a half years in prison, suspended for four years.⁠^{[28][29][3][30][31]}

The acquittal on embezzlement became final, and Karpelès appealed the conviction. The Tokyo High Court upheld it on 11 June 2020, and on 27 January 2021 Japan’s Supreme Court dismissed his last appeal, making the suspended sentence final. In the United States, Mt. Gox customers had sued him in Illinois in 2014; after the two sides settled, the claims were dismissed with prejudice in January 2022, meaning they cannot be brought again.⁠^[31][3][32]

Repaying the creditors

The bankruptcy had an odd consequence. It fixed customers’ claims in yen at their 2014 value, so as bitcoin’s price rose, the coins left in the estate became worth far more than the claims. Whatever remained after creditors were paid would go to Mt. Gox’s shareholders, Karpelès explained in 2018: chiefly himself, through Tibanne. “I don’t want this. I don’t want this billion dollars,” he wrote. Some creditors had already asked the court to switch the case to civil rehabilitation, under which claims for bitcoin stay claims for bitcoin, and on 22 June 2018 it did.⁠^[24][33][42]

Kobayashi, now the rehabilitation trustee, held about 141,686 bitcoins in September 2018. Creditors approved his repayment plan on 20 October 2021, with about 99% of those voting in favour. Some reported receiving yen in late December 2023, and on 5 July 2024 the trustee made the first repayments in bitcoin and bitcoin cash, through exchanges chosen to pass them on. By March 2025 more than 19,500 creditors had been repaid in bitcoin and bitcoin cash.⁠^{[27][34][35][36][37]}

The deadline has moved back by a year each autumn since 2023. On 16 October 2026 the trustee said repayments were “largely completed” for creditors who had finished the paperwork without problems, but that “many rehabilitation creditors still have not received their Repayments”. With the court’s permission, he moved the deadline from 31 October 2026 to 31 October 2027.⁠^[38][39]

Karpelès stayed in Japan. In 2018 he became chief technology officer of London Trust Media, the company behind the Private Internet Access VPN; in 2024 he announced a new exchange in Europe, EllipX; and by 2025 he was working on another VPN, alongside Roger Ver. He says he owns no bitcoin and wants nothing from the Mt. Gox estate. “To just get a payout for something that’s essentially a failure for me would feel very wrong,” he told Bitcoin Magazine.⁠^[40][41][1]