Flash back to crypto. Satoshi Nakamoto, the creator of bitcoin and the first bitcoin block, mined the first bitcoin block on January 3, 2009. This was a big day in the history of banking. At that time, most people didn’t know about Bitcoin, its network, its currency, or its ability to change things. But some businesses saw the opportunities this new ecosystem quickly and decided to put their time and money into it.
Mark Karpelès, who is known as “the Baron of Bitcoin” in the French crypto world, is one of these pioneers whose name stands out. Marc Karpelès has left an indelible mark on the history of cryptocurrency. He is a figure that represents this world that is always changing. He recently talked to the Tribune and gave them an update on his life, from the mess at MtGox to his plans for the future UnGox project.
MtGox, A Bitcoin Legend
MtGox was created in 2009 as a way to trade Magic: The Gathering cards. It quickly grew into what was then known as a benchmark exchange. Based in Japan, this platform has become a major player in the cryptocurrency market, handling nearly 70% of all Bitcoin transactions at its busiest. It was run by Jed McCaleb and then Marc Karpelès.
But in 2014, the dream turned into a bad dream. The site admitted that it had been hacked and lost 850,000 bitcoins, which is a huge amount that, at the current price of BTC, is worth hundreds of millions of dollars.
People think of this event as one of the first scandals in the crypto industry. It shook the market and pointed the way for other crises, like the FTX platform’s fall in 2022. The Japanese government’s quick action caused MtGox to shut down quickly in 2014, which put Marc Karpelès in a lot of legal trouble. Karpelès was jailed from 2014 to 2015 and was accused of not only not taking enough care to make sure the platform was safe, but also of hacking into his company’s computer system and stealing about $2.6 million in today’s money. Using Bitcoin.
Mark is the one who needs to sum up the end of this court drama:
According to the report, Japan’s court system is not the fastest in the world. The process started in 2014, and the Russian hacker Alexander Vinnik was caught by American police in 2017.
Mark Karpelès for La Tribune
Mark Karpelès looks back on the time of MtGox.
Mark Karpelès in the mess at MtGox
His arrest in Japan in 2015 on charges of theft and changing data added to the judicial drama. Even with all of these problems, Karpelès has always said he is innocent, saying that he was hurt by security holes in his own platform.
He was given a two-and-a-half-year suspended jail sentence in 2019, but he was found not guilty of the most serious charges. Also, he told our coworkers at La Tribune:
We need to know how big this event was at the time. After slowly taking money from MtGox’s “hot wallet” for several years, the hacker had been able to stay out of sight. It’s estimated that these transfers cost more than 660,000 bitcoins in February 2014. With the price going up so quickly in the fall of that same year and then staying around $850, Mt. Gox has to deal with big changes in prices. Users have asked for payments. This is what makes the platform team realize that these bitcoins are lost.
Withdrawals were stopped by Mt. Gox on February 7. Bitcoin’s price, which had been above $800, dropped quickly and dropped to $700 in just a few hours. All of the exchange sites in the Bitcoin ecosystem are vulnerable to an attack from February 9th to 11th that takes advantage of the fact that Bitcoin transactions can be hacked. The company Mt. Gox warns its people about this. It’s the start of the end.
A lot of the early adopters, who are known as “OGs” in the crypto world, talk about this time period in the same way that veterans do. An explosion like the one we had in November 2022, when FTX and the whole Sam Bankman-Fried company fell apart.
Karpelès also says that he felt sorry for Sam Bankman-Fried at the start of the FTX bankruptcy and was able to see things more clearly after that, as he wrote on his social networks a few months ago. Lack of regret and a disconnect from reality: He sees the SBF scandal as a tumor that has burst and needs to be cleaned up in the crypto world.
What’s next for Marc Karpelès?
Marc Karpelès, who is 38 years old now, says he doesn’t have any bitcoin anymore. He is still very interested in cryptocurrencies and wants to make a difference in the crypto environment from France, where he is from. One of its plans is to start a cryptocurrency rating service called Ungox. The goal is to give investors ratings that they can trust and understand.
By giving people important information and risk analysis, it hopes to help more people understand and use cryptocurrencies. In more detail, Karpelès says that the level of security needed in the crypto world “is rising very quickly and is a constant challenge because hackers are getting better.”
There would be limits to bitcoin, though. The former boss of MtGox is worried about how centralized it is, with only a few bitcoin workers controlling it. These groups would rather try to make answers that are less centralized, which is why they are turning to Ethereum.
“I like to look at different kinds of tech.” Ethereum is more valuable now that it has smart contracts… We can still find something better.
People are coming back to crypto, but Marc Karpelès’s story and the past of MtGox are still connected to how Bitcoin and our ecosystem have changed over time. One wound that the crypto market is having a hard time healing is the repayment of MtGox victims, which has been going on for almost 10 years and has left the crypto community with a bad taste. Between the hack and the rise in the price of bitcoin, keep in mind that users get 0.18 satoshis back for every bitcoin they lost. Out of the 42,000 accounts that were hacked, 2000 to 3000 French wallets are affected.