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Mt.Gox employees reveal abuse of client moneys

In an exclusive interview Reuters had with Mt. Gox employees, it was revealed that there was abuse of client moneys on extravagant spending. Coin Desk today posted an article that employees had since two years ago questioned CEO Mark Karpeles on the handling of money at the Mt. Gox exchange in Tokyo.

Major Bitcoin Exchange Mt. Gox Goes Offline
Photo by Andrew Burton/Getty Images

There was a challenge to Karpeles regarding client money used for certain expenses according to three employees who gave an exclusive interview to Reuters in Tokyo. Their accounts since 2012 of the questions raised and the information to which they had access will become crucial to the legal process for finding any money, discovery of who was involved in any of the alleged abuse and bottom line who decided to take client moneys for any use of Mt. Gox expense payments or personal handling of money.

According to the bankruptcy administrator there is a loss of $27 million in USD approximate money value held at the bank in a Mt. Gox business account and $450 million in bitcoin at the exchange. The Tokyo start-up that leased expensive office space in the same building as Google is being investigated for every small detail to unravel the collapse of the exchange and Karpeles’ inconsistent statements on the Mt. Gox website and his tweets on Twitter.

It is reported from records under investigation that over one million traders during the past 3 years had used the exchange up until the collapse. They were under the understanding that the bitcoin was being held in cold storage at Mt. Gox.

A bankruptcy Tokyo court appointed administrator on Friday will be key to flushing out the details and finding any of the missing cash or bitcoin in storage. The review is holding clues to which the employees are pointing direction to questionable purchases of personal items.

The interviewed employees began in 2012 to question in addition to the expensive rent space for the business other purchases of high-tech gadgets such as a robot and a 3-D printer. They also noticed that Karpeles had purchased a racing version of the Honda Civic imported from Britain for himself.

A one hour meeting in 2012 occurred with employees asking Karpeles if any client moneys had been diverted to business expenses and personal expenses. The employees did not have access to financial records and Karpeles told them that none of the client funds had been used in any fashion. The employees left the meeting frustrated. Karpeles owns 88% of Mt. Gox and as a private company he was not required to release any accounting details. Tokyo police are also investigating and the employees will remain anonymous as the investigation continues its search.

The accounting details are very complicated with a sum of USD currency equivalents mixed with bitcoin from the exchange. Mt. Gox was doing 90% of the world’s digital trade in 2012. Karpeles had no debt to report.

Transactions according to Karpeles interview with Reuters in 2013 was that $20 million came into the exchange each day and a $300,000 cash out against it.

As an 88% holder of the Mt. Gox Karpeles had access to the bank accounts and each withdrawal was done manually. This raised suspicion from the employees as they had difficulty in completing transactions to cash out for clients.

The official bankruptcy filing by Mt. Gox did not list bank accounts. The detail showed that it owed 1.3 million bitcoin traders $55 million based on deposits that had been accepted.

The next round for Mt. Gox is a May 9 date for an examination report issued by the Tokyo District Court. There is a lawsuit in the US but Karpeles has refused to travel to the US

The situation remains here in the US requesting that Karpeles comply with testimony in the US to protect creditors. Karpeles has declined and only offered an interview via video link in Taiwan.

To find more articles on this topic view the list below in Author’s suggestions and the video atop this article on the Mt. Gox bankruptcy.

Twitter: Victoria Wagner@victoriaross888

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