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10 yrs sought for bitcoin exchange MtGox's ex-CEO over embezzlement

In this Feb. 28, 2014 photo, Mark Karpeles, chief of Tokyo-based major bitcoin exchange MtGox, speaks during a news conference in Tokyo. (Kyodo)

TOKYO (Kyodo) -- Prosecutors sought on Wednesday a 10-year jail term for the former CEO of MtGox Co., once the world's largest bitcoin digital currency exchange, for embezzlement.

The prosecutors claimed at the Tokyo District Court that Mark Karpeles, 33, "diverted company funds to such uses as investing in a software development business for personal interest" and "played a great role in totally destroying the confidence of bitcoin users."

Karpeles, who was born in France, pleaded innocent in the first hearing of his trial in July 2017, saying, "I swear to God I am not guilty," in reading out a prepared statement in Japanese.

According to the indictment, Karpeles embezzled a total of 341 million yen ($3 million) of customers' money kept in a MtGox bank account by transferring it to his own account between September and December of 2013. Karpeles also allegedly manipulated data on his company's trading system to pad the balance.

In February 2014, MtGox suddenly shut down all transactions, causing a panic among its customers around the world. It then announced that it had gone bankrupt after having lost about 850,000 bitcoins, worth about 48 billion yen at the time.

MtGox said the bitcoins were likely stolen through hacking.

In June this year, the Tokyo court issued an order to commence civil rehabilitation proceedings for MtGox, halting its bankruptcy proceedings.

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