Mark Karpelès has spoken of an initial coin offering (ICO) on November 16 that Mt Gox is considering as a last-ditch attempt to revive the bankrupt Japanese bitcoin exchange. The once-dominant company fell from a considerable height in 2014 after allegations of mismanagement and fraud.
At the time, hundreds of millions of dollars were feared lost, in the form of bitcoin at then-current prices. Ultimately, only 202,000 bitcoins were retained in the custody of a trustee. In the years that followed its rapid decline, Mt Gox was involved in a discordant and ongoing claims process. One of the claims includes $75 million from CoinLab. Following that, Japanese prosecutors charged Karpelès with embezzlement in the trial which commenced in July 2017.
He is accused of losing $28 million of user money and 850,000 bitcoins due to the mismanagement of the world’s once largest bitcoin exchange. As Japanese authorities press charges, the 32-year-old faces up to five years in jail or a fine of 500,000 yen ($4,000).
Whilst at its most successful, the Tokyo-based Mt Gox handled approximately 80 percent of global trades. At the point of the company’s collapse, Mt Gox shifted the blame for the 850,000 BTC loss to a security flaw and alleged hacking attack. It subsequently announced that 200,000 of the lost bitcoins had been recovered.
To date, Karpelès denies his wrongdoing and swears his innocence, despite being found to have transferred $3 million from a Mt Gox account to one in his own name, as well as inflating his account by $1 million. According to the Yomiuri Shimbun newspaper, he claims his intentions were always to return the money. Additionally, it was uncovered that Karpelès used the exchange’s fund for personal purposes, illegally charging his apartment rent and furniture bills to the Mt Gox account.
Although the price of bitcoin has risen close to $8,000, those affected by his embezzlement may ultimately never receive compensation nor a return of their lost funds. Despite this, many of them are unrelenting in their attempts to get their money back, insisting that the increase in BTC value be factored into payouts.
Karpelès has put forward the possibility of reviving Mt Gox as a potential method of resolving this issue. He suggests that the accompanying price tag of $245 million could hypothetically be recapitalized in one of two ways; through an equity sale or an initial coin offering.
In a blog post he wrote on November 16, Karpelès said the following about the prospect of an ICO:
“[It] sounds more challenging, both legally and because there is no guarantee of raising enough to revive Mt Gox. In case there is not enough raised it could still be locked to be distributed to creditors, which would be better than nothing.”
He went on to urge any potential buyers to contact him via email should they be interested in fronting up the $245 million to buy the exchange. This parting statement by him admits an acknowledgment that this notion is farfetched at best.