Mt. Gox head Karpeles plans new Japan bitcoin tech business

By YURI KAGEYAMAFeaturesAssociated Press

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Former Mt. Gox CEO Mark Karpeles attends a news conference at the Foreign Correspondents' Club of Japan Wednesday, June 5, 2019, in Tokyo. Karpeles, arrested in Japan after his bitcoin exchange collapsed from massive hacking, is starting a new business around the same computer technology that led to his legal troubles. (AP Photo/Jae C. Hong)

Mark Karpeles, arrested in Japan after his bitcoin exchange collapsed from massive hacking, has started a business around the same computer technology that led to his legal troubles.

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Karpeles told reporters Wednesday he wants to help make Japan a global leader in blockchain, the technology behind virtual money like bitcoin. His new company, registered in Japan, aims to create a new, secure operating system that is much faster than those currently in use, he said.

The 34-year-old Frenchman said his goal was to help Japan to regain its lead in technology, which it has lost to American companies like Apple, Amazon and Facebook over the past several decades.

"My love for Japan has not changed," Karpeles said at the Foreign Correspondents Club of Japan.

"Japan used to be engineering superpower in terms of its PCs but right now, taking the cloud for example, it's the U.S. that dominates. But I still believe in the potential Japan has and I would like to develop that," he said.

Karpeles, a computer prodigy with an interest in Japanese animation and games, moved to Japan in 2009. He was arrested in 2015 after Mt. Gox collapsed, and spent 11 months in detention. He was cleared of embezzlement and fraud allegations in March, but is appealing a conviction on charges of manipulating electronic data.

Since Karpeles received a suspended sentence he is not serving jail time. Prosecutors had demanded 10 years in prison. Karpeles said all along that he was innocent.

Bitcoin has been a legal form of payment in Japan since April 2017, and a handful of major retailers already accept bitcoin payments.

Karpeles shook his head "No" when asked if he has any cryptocurrencies. They carry high risks, he said. He has likened them in the past to musical chairs for 10,000 people.

"I wouldn't say I'm rich today," he said.

But Karpeles said he believes blockchain is still useful for cashless payments, cloud solutions and new areas called "smart contracts," or digital transactions.

It's unclear where the millions lost in the Mt. Gox hacking and collapse have gone. Mt. Gox still had about 200,000 bitcoins left in a separate storage location after 850,000, worth several hundred million dollars at the time, disappeared in 2014. Those are under the control of trustees managing its bankruptcy proceedings.

A main suspect is Alexander Vinnik, a Russian who has been indicted by a California grand jury on suspicion he used funds from the Mt. Gox hack for money laundering. The U.S., France and Russia have sought Vinnik's extradition.

Karpeles' lawyer, Nobuyasu Ogata, said the verdict in his case highlights legal gray areas for cryptocurrency crimes. He expects a verdict later this year.

While he continues to hope to find the missing bitcoins, Karpeles is putting his formidable technical skills to use as chief technology officer of his new company, Tokyo-based Tristan Technologies Co.

And in a society that tends to ostracize people who have had run-ins with the law, he said he was starting over "from zero."

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