Topic: Criminal complaint against Mt. Gox and Mark Karpeles (Read 4719 times)

The multi-party lawsuit is an interesting civil case against Mt. Gox? I don't think so

work on it in jail, you get out when the money is found -- that simple

Yeah, well I'm eating those words now.

This is the most sober view about what's happening with MtGox and and our community's attitude to this situation

Really? How do you know? I'm not saying he isn't, but I'm saying we have no idea what's really happened there. McCaleb has a new start up that he's pouring development money into. Maybe he raided the Gox piggy bank for some start up capital figuring he could have it all back before it would be needed. That's not as crazy a theory as some stuff I've heard here an on Reddit. I'm not saying he did. I'm just saying we have no way of knowing cos no one is telling us anything.

"The amended US suit also added Mark Karpeles’ second-in-command Gonzague ***-Bouchery and Mt. Gox’s original founder and shareholder Jed McCaleb as defendants."

sucks that jed mccaleb got dragged into all this.

JED IS INNOCENT.


source:  http://www.coindesk.com/japanese-megabank-mizuho-now-official-defendant-gox-saga/

Correction:
Criminal complaints against Mt. Gox and Mark Karpeles are needed, thank you for doing this.

That's correct. And when the SEC finds criminal activity for which they think a fine isn't enough, they turn it over to the FBI and the US Attorney for prosecution. Wilmer Hale (a law firm) has a list of SEC actions which include parallel criminal prosecutions.

They don't do it that often. But, for example, Raj Rajaratnam of Galleon Management, a hedge fund, is now US Prisoner #62785-054, to be released in 2021.

Mt Gox screwed up in multiple ways, over multiple jurisdictions, in many countries as such complaints should be made to ALL.

I'm told Mark has a fraud issue that predates his gox association, if this impacts his civil bankruptcy plea AND concern USA, Japanese, and French authorities concerning civil and criminal matters all of them should be aware of it, let each one decide how to use the intelligence.  If you want to report it to Burger King and McDonalds that's up to you.

It matters in determining who the community needs to put pressure on if it wants a particular result.  You can say it doesn't matter who does what and you just want it done, but that statement isn't productive.  No matter how much you yell at McDonalds, they're never going to make you Whopper. 

it doesn't matter who has the power to arrest, bring charges, judge, incarcerate, or exterminate; the community wants swift action not procrastination.

There seems to be a lot of confusion in here, so let me make at least this point clear:

The SEC is a civil enforcement agency, it does not have the power to bring criminal charges.  That's why Shavers was never arrested for his actions related to his bitcoin investment scam.  At the federal level, only the US Attorney's office can bring (non-military) criminal actions against an individual.  

Karpeles' Fraud History    [WE ARE CONNECTING THE DOTS AT: https://bitcointalk.org/index.php?topic=492776.0;all]


http://gawker.com/does-mt-goxs-ceo-have-a-secret-history-of-online-payme-1534752110

"In the wake of Bitcoin exchange Mt. Gox announcing that it lost $473 million worth of the virtual currency, many people who saw their money disappear have called for CEO Mark Karpeles to be imprisoned. Well, funny thing: it wouldn't necessarily be the first time Karpeles has been arrested for fraud.

As pointed out to Gawker by a tipster who wishes to remain anonymous, Karpeles seems to discuss a past arrest concerning "payment systems on the internet" in a 2006 post on his blog Magical Tux. The post, like all on the blog Karpeles links to in his Twitter bio, is in French, but the tipster translated the relevant section on his personal Tumblr:

Indeed, during my misspent youth, I made a huge, huge mistake. Enough silliness that I found myself locked into custody and brought temporarily placed in the "mousetrap" (souricière: possibly "n.f. (pol.): 'Baited trap' laid by the forces of law-and-order."). This was followed by an investigation of more than a year, which eventually ended in a trial.

I will not give too much detail about what I did wrong, just say it concerns payment systems on the Internet. I spent two years taking risks becoming larger, perhaps because it was an exciting side … whatever, I ended up getting arrested (in rather bizarre circumstances, noting that when I was arrested, I was just in a police station to file a complaint for something else). Anyway, I was released four days later and placed under "judicial review". Basically I did not have the right to leave France and I had to go regularly to the courthouse to speak to someone who was going to see if I lived in "the right way".

...

In the end, the trial was not concluded too bad for me (3 months suspended sentence disappearing after 5 years, and nothing in the criminal record).
A Google translate for the blog post returns the same story, albeit in less smooth English.

According to Karpeles' blog post, the fallout from this "huge, huge mistake" is why he eventually migrated to Japan, where he now lives. There is almost no evidence of Karpeles' possible past arrest on the internet, perhaps because, as the blog post claims, his sentence would have been wiped from records somewhere around two years ago.

But a recent story in the French paper Le Journal de Sâone et Loire, that includes quotes from Karpeles' mother Anne, says that after starting an IT company in Paris, Karpeles left the city after being caught committing "computer fraud." This small tidbit was noticed by Reddit's Bitcoin forum, but has not yet trickled up to the media until now.

If Karpeles does have a history of committing fraud, it doesn't necessarily mean that he did anything wrong legally or morally with Mt. Gox's Bitcoins. But it probably won't make the people out $473 million sleep any easier.

The Bitcoin community will surely learn a number of lessons from the Mt. Gox disaster, and here is a simple one: when investing in Bitcoin, make sure the guy you're trusting with your money doesn't have a secret past committing fraud. Even if that means finding someone who knows French."


Here is additional relevant and related back-story:
http://www.lejsl.com/saone-et-loire/2014/03/01/un-qi-superieur-a-la-moyenne  [the translation is pretty bad]

Before talking to him in the world Mark Karpeles grew up in Dijon. His mother tells the journey of this computer genius.

The man who is now the most hated Internet has boiled teenager. A chubby face "geek" who scares anyone. And yet, this young 28 year old man born in Chenôve is now the target of all fantasies on the internet. Friday, after disappearing for three days, Mark Karpeles admitted to losing the $ 480 million that were stored in virtual currency on its site, MtGox. More than one million users have lost small fortunes in history.

A higher IQ than the average

If apologized, Mark Karpeles still remains in the sights of Japanese and U.S. authorities. The disappearance of that could be fraudulent. Nothing to worry his mother, contacted Friday and an impressive calm on the phone. "I know that Mark will do what it takes. If it is hidden for three days, it's just to gain strength and confront what awaits "says the Dijon now based in Switzerland. "And if he was really worried he would have called me. "

If Anne Karpeles talks about his son as if nothing had happened "for two minutes" that have lasted 15, the scandal generated by Mark resounding. However, the course of Mark Karpeles is nothing that a highwayman able to disappear in a few days, as he did Monday. Born in Chenôve in 1985, Mark Karpeles lived his early years in Côte-d'Or, with his mother, a geologist. He attended school Chevreul, lives in the city center of Dijon and already passionate about IT. "I think we did our first program together, Dijon, when he was 10 years old. "

Because the boy is early. An IQ test diagnostic her intelligence above average. "But there was no effort at school," laughs his mother, not stressed by the ordeals by his son. "I made him do the cooking, sewing, sport, but he mostly hung with computers. "At the point of becoming a genius, even if Anne Karpeles not pronounce the word. "Admittedly, it is not bad in the kitchen either. By cons, it can barely sew on a button (laughs). "A computer genius who, baccalaureate - got to Paris, where his mother had moved - begins in an IT company in Paris. He left the capital a little faster, accused, according to our information, computer fraud. He moved to Japan, where he bought in 2011 MtGox. It is the platform number 1 of Bitcoin. Until February 7, when the first bug, the site managed 80% of global Bitcoin transactions. Suffice to say it was worth a fortune. Today, Mark Karpeles, is accused by the Internet community to be incompetent - at best - or a crook. Nothing to worry his mother who, unlike his son, a young dad, kept ties in Côte-d'Or. "The last time I went to visit him in Japan, its website had been attacked. He solved the problem overnight, "says Anne Karpeles. "I'm sure it will still succeed this time. "Before starting, a knowing smile, a lapidary:" And $ 480 million is what we see when playing with what states and financiers. "

For the background, see the little guy Chenôve now married to a Japanese attacked on all sides, Anne Karpeles expected. "The computer world is hard. And when we know how the Bitcoin angry central banks, governments, one can understand that my son disturbed. "At the point of today find themselves propelled to the front of the stage. Not bad for the former shy child the Rue Neuve-Bergère de Dijon."

With the admissions in the U.S. Bankruptcy filing by Mt. Gox, criminal action looks more and more likely, eventually.

http://www.computerworld.com/s/article/9246921/Mt._Gox_kept_exchange_open_despite_knowledge_of_large_scale_theft?taxonomyId=144&pageNumber=1

The main point of a criminal prosecution is to be the company in the hands of someone else. A court-appointed individual. While that may be slow, very slow, it would at least likely have some accounting done.

[/quote]
You said you believe they are solvent, and you said you have btc there, you also indicated that you know you can take fiat out, so my question is have you allowed your fiat to remain there or have you removed your fiat?
[/quote]

I converted the fiat I had into BTC at a very discounted price. If they are insolvent after the tx malleability hack they are more likely to be BTC insolvent than cash insolvent. But this is straying off the point, which is that I think a law suit is like punching the person who is saving you from drowning, even though they are the one that pushed you into the water. Let them drag you to the edge before you give them a good kicking.

Where can i read this interview? If he said that he just confessed they are bankrupt!

they may have enough to cover you, but not enough to cover everyone all at the same time.

they said they fixed the problem, now it's a matter of allowing for the faucet drip of withdrawals to take place,

they have not decided when that will take place so that simply compounds the air of impropriety at Mt. Gox

You said you believe they are solvent, and you said you have btc there, you also indicated that you know you can take fiat out, so my question is have you allowed your fiat to remain there or have you removed your fiat?

There's an embarrassing irony, watching libertarian bitcoiners, passionate about a currency that doesn't depend on the government, screaming for the protection of the SEC.

If Mt Gox has a small team working on solving this, and they are as incompetent as everyone says, holding them up in a law suit isn't going to make them fix the problem any faster. If they were insolvent then I would hope they would have had the good sense to tap into this ongoing arbitrage opportunity which they have exclusive access to, in order to balance their books by now, and there's plenty of cash for everyone.

As far as I can tell, Bitcoin's fiat withdrawal hasn't ever been halted. Didn't I read that in a MT Gox press release? One of the tiny bits of information they have given out. It's still as painfully slow (over a month) as it's always been. All you have to do is ask for your cash. Has anyone read through the terms and conditions we signed up for when we opened our MT Gox accounts? Does it say anything about timely access to fiat and BTC?

These guys (at mt gox) are clearly not the sharpest tools in the box, under resourced, badly managed, indifferent to the balling of their customers, but right now, letting them get on with their IT fix is the best we can do.

Disclosure: I have a good few BTC in MT Gox and would very much like to get it out to Bitstamp asap. I have no doubts that MTGox has enough cash and BTC to cover my investment. My only doubt is if they have the wherewithal to develop their software solution this side of March.

Litigation by users - whether launched in the US or in Japan - is always going to be a much slower and more expensive route to sorting out all the issues with MtGox than involving regulators.  Neither option guarantees the return of user funds.

Deposit takers aren't always classified as banks.  PayPal is a prime example of how a financial service provider can be regulated differently in different jurisdictions and in fact it's prohibited in Japan from providing certain services which may only be provided by banks, although it certainly accepts deposits.

It's not really enough to look at banking laws alone.  You need to look at financial services regulations as a whole and see whether there's some other regulation which is more applicable to the situation at hand.

A very interesting post by Prof. Lenz on how Mt. Gox may be a bank under Japanese law, and therefore subject to possible significant criminal penalties:

http://www.reddit.com/r/Bitcoin/comments/1ylnso/has_mtgox_already_reported_to_the_japanese_prime/

The feds can and do go after offshore companies.  The online poker busts are a good example of this.

Situations like this boil down to a matter of preference.  "The community" is not some monolithic entity run by a committee or a democracy in which the majority preference prevails.  People have different philosophies regarding Bitcoin and want different solutions when a crisis happens. 

You can discuss the philosophical issues regarding involving authorities in the problems of Bitcoin services until you're blue in the face but people have the right to act in their own best interest in situations like this and to seek punishment of wrongdoers if that's what they believe will lead to other services being less reckless.  It's not as though not involving the authorities has had a great track record in the past.

What do you call "work"

What outcome would you expect to see if govt intervention 'worked'?

That's really difficult situation. I also don't think it is good to ask help from the Feds. It will work only with U.S. companies.

Expecting the Gov to actually help.......LOL?

and that EXACT same thing would happen again,  once you call the police you can't direct, manage, or otherwise control them when they respond.


govt interference is not the answer folks, not in the short term and not in the long term, self-regulation IS the answer

This isn't usually a problem because most licensed money transmitters have more than enough assets to pay out customer balances even when they have to pay very large civil forfeitures.

There's inherent risk in using services you know to be unlicensed and uninsured, especially if they're small.  People might judge using the exchanges as being "worth the risk" of losing their funds to hacks, the operators running with the funds or regulators seizing the service and all its assets, but users know these risks exist and have little cause for complaint when those events actually happen.

that would suck since it's customer's funds and not even mtgox's that they seized. so they hurt the people for doing nothing wrong

It's possible that money will go to the government in a civil forfeiture and no-one will be able to claim against it.

Yep, not easy collecting your claim. I do wonder how it would work as the Feds do have some of MtGox's assets already (google "Feds Seize Assets From Mt. Gox’s Dwolla Account, Accuse It Of Violating Money Transfer Regulations"). I presume you could make a claim against that, but I would guess that the Feds have #1 priority on that cash and wont give it up easy.

You have no idea what you are talking about. This especially "all of things you say the U.S. courts can do is true but not through small Claims court." If they don't pay up you can request an order to seize property to pay the judgment. Also, you can bring any company you want to a small claims court. If they don't turn up, then they can't dispute your arguments, and you win. The court will issue a judgment in your favor.

What exactly doesn't make sense? If I could explain it any better to you then please let me know.

That was probably the jurisdiction stipulated in the contract between Coinlab and MtGox.

It's unlikely that MtGox has any significant assets in the US any more.  The whole point of the Coinlab/MtGox deal was to put MtGox at arm's length from US transactions.  They already saw long ago that US based assets would make them vulnerable. The company MtGox set up in the US in order to funnel transactions already had its funds on hand seized.

MtGox customers can certainly launch action in the US against MtGox, but it might not be the optimum legal strategy against a company which isn't based in the US and whose bank accounts are held in Japan and Poland.  There is also no guarantee that MtGox would accept the authority of a US court.  They've refused so far to recognise the authority of NZ law in relation to the Bitcoinica funds still held on MtGox.  Litigation is expensive enough and there is no guarantee that a Japanese court would domesticate any orders made in the US.

If you want to take a US-based route, then using US regulators is likely to result in faster action and a quicker result than protracted litigation initiated by users (especially when you consider that MtGox may have to pay out large amounts when litigation already in progress is determined later this year).

You're telling me MtGox has absolutely no assets in the US? I doubt that. A US court can seize anything under their jurisdiction, including a US-based bank account, private jet / company car in the US, whatever. If you've suffered damages then you can sue wherever you want. The only difficulty is collection (and transfer agreements are often in place - e.g. rack up a credit card bill in the USA, then try to run to the UK, and it won't be too difficult for the company to seize your UK assets via a UK court).

Why exactly are Coinlab suing MtGox in the US (Western District of Washington)? Are they smart asses too?

http://ia601700.us.archive.org/8/items/gov.uscourts.wawd.192566/gov.uscourts.wawd.192566.docket.html

EDIT: Yes, coinlab, not coinbase.

Mark's statement said that their "business model" is OK in the eyes of the regulators.  That doesn't mean for a minute that they're not breaking any laws. 

It's absolutely appropriate to bring to the attention of the authorities that MtGox has been increasingly restricting the ability of its users to withdraw their funds and ask those authorities to look into whether the company is knowingly continuing to take more user funds while actually insolvent.  They can be forced to disclose the the authorities information which they're not obligated to tell their users.  Action by the authorities is likely to bring a definitive answer about the solvency of MtGox far more quickly than litigation by users.

I suspect you are right. OTOH, I suspect it is inevitable. Some adult supervision is clearly needed here. Karpeles refuses to deal seriously with the situation.

This type of action is EXACTLY what you guys really don't want.  You are literally asking for trouble.  

I'm telling you: Handle it internally, you don't want to invite the govt via any of their departments or agencies involved more that they already are.  


You're asking for the WRONG kind of help.  

If he gets locked up (criminal) or locked down (sec) either way you get locked out (funds frozen).

In his email interview with the [WS] Journal, Karpeles repeatedly said the company's solvency was confidential but that it had discussed its business model with Japanese authorities "to ensure that we are operating within the law here."

Interesting, where did he claim that?

Funny how people go running to big brother (SEC, etc) to solve a problem. You yourself can personally deal with the issue by suing MtGox directly. The small claims court is not expensive, and MtGox probably wouldn't even show up due to the cost of actually hiring lawyers. If you've lost a significant amount then team up with other grown ups who are suing MtGox in higher courts. Stop whining on forums about it.

 o please.
SEC deals with securities - which is what Trendon Shvares offered.
mtgox offers to "securities". all the legal experts here are not really experts.
besides the point Mark claims to be in contact with Japanese authorities so he's done the part for you

is this winnable?

So you are really offering 1 Bitcoin to each person who starts a complaint? If you are serious about that you should probably make a topic in the Service Discussion forum.

I think you meant "coinlab".

Please start your investigations, I will donate everybody who will start a criminal complaint with 1 Bitcoin !

Also I am willing to spend Bitcoins for everybody who helps with information about this case.

Especially because I am thinking that Mark Karpeles is involved into insider trading.

I am very angry that a bitcoin foundation member is fundamentaly harming the bitcoin community.

If you're in the US, filing a complaint with the U.S. Securities and Exchange Commission is worth doing. They have jurisdiction over broker/dealers who sell directly to US persons, which Mt. Gox does. The SEC treats Bitcoin scams just like other scams, as Trendon Shavers found out. The SEC has a cooperation agreement with the Japan Financial Services Agency, so the SEC can make things happen in Japan. Mt. Gox can be dragged into a US court, as the ongoing Coinbase lawsuit demonstrates.

With all the publicity surrounding Mt. Gox right now, a phone call to the SEC's enforcement division from someone with significant funds stuck in Mt. Gox would probably get some attention. Ten such calls...

While the multi-party lawsuit is an interesting civil case against Mt. Gox, it may be that a better approach for locking down records and increasing pressure on Mt. Gox to fix the withdrawal problem would be reporting them to the criminal justice system, with complaints of fraud.

It appears that both the Antimonopoly Act and the Unfair Competition Prevention Act in Japan may cover making deceptive promises and statements.

The other advantage of a criminal complaint is that it would hold the CEO responsible, versus the corporation itself.

Is there anyone in Japan who could contact the appropriate authorities?