Mt. Gox Used Client Money for Operations and Extravagances, Allege Staff
Mt Gox used customer deposits to fund company operations and unnecessary purchases back in 2012, according to its staff.
Mt. Gox allegedly spent money from its clients' deposits on operating expenses including extravagances as early as two years before it went bankrupt, according to new claims by employees.
In a series of exclusive interviews given to Reuters in Tokyo, the small group of anonymous current and former Mt. Gox employees claim to have approached CEO Mark Karpeles about their concerns in early 2012, but their requests to view the company's financial records were rebuffed.
Mt. Gox spent money, said Reuters’ report, on rent in the same high-status Tokyo office building as Hulu and Google, office equipment that included a robot and a 3D printer, and a special edition Honda Civic imported for CEO Mark Karpeles from the UK.
This occurred just as the company, and bitcoin itself, were beginning to expand and gain interest from investors.
Staff kept in the dark
The employees, worried that Gox was spending more money than was coming in, requested a formal meeting with Karpeles and asked for proof that client deposit amounts were protected.
After a one-hour meeting, Karpeles assured them customer money was not being used improperly but would not provide any evidence, leaving them dissatisfied.
It fits with other unofficial reports of a general malaise in the office and personal dissatisfaction with Karpeles, who employees have claimed paid little attention to Mt. Gox's exchange business and an excessive amount on side projects like the company's planned Bitcoin Cafe and its transaction processing system.
Legally, Mt. Gox was under no obligation to release any financial details in the time it operated, since it was a privately-held company 88% owned by Karpeles.
Extensions and refusals
In other Gox news, the company website has been updated to announce that the deadline for an examination report issued by the Tokyo District Court has been extended to 9th May.
Late last week it was also revealed Karpeles is refusing to travel to the US for questioning, as part of the Gregory Greene lawsuit.
Greene and Joseph Lack had requested a US judge order Karpeles to the US to testify, "in order to protect domestic creditors." Karpeles, apparently, has declined to go to the US and offered instead to go to Taiwan, for questioning by lawyers live or via video link.
Steven Woodrow, a lawyer for the plaintiffs in the case, expressed disapproval at Karpeles' decision, saying anyone seeking protection from US courts should be prepared to enter the country to justify such protection in person.
Gold chain image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.