France-born Mark Karpeles, the head of collapsed Bitcoin exchange MtGox, is in deep legal trouble after Japanese prosecutors charged him with embezzlement. Karpeles faces charges of fraud over the disappearance of hundreds of millions of dollars in Bitcoin that belonged to Gox traders.

Also read: Mark Karpeles Arrested in Japan on Suspicion of Fraudulent System Manipulation

Interestingly, a report says that the bankruptcy claims against Gox have added up to be six times the market cap of Bitcoin itself. The amount of all the bankruptcy claims filed by over 24,000 creditors is found to be ¥2.66 trillion, which translates to $22.09 billion USD. Bankruptcy claims filed by Gox’s top three creditors alone make 95% of the total claims.

What are Embezzlement Charges?

From the outset, it appeared as though Karpeles was involved in embezzlement, where he dishonestly withheld investments from customers that trusted Mt. Gox. If Karpeles did embezzle funds from Gox, not only would he have breached customer trust, but he would have also methodically engaged in a premeditated crime. If Karpeles is indeed guilty of this crime, it would mean that he took precautions to conceal his criminal activities.

Japanese prosecutors that Karpeles falsified data and pocketed millions of dollars in Bitcoin deposits. Early in 2014, Gox had to cease operations after 850,000  — valued at around $480 million at the time — disappeared from its digital vaults. In the days preceding its collapse, Mt. Gox was the leading Bitcoin exchange, with 80% of global Bitcoin transactions running through the exchange.

However, given Karpeles’ charges, it may be the case that the lost coins — and Gox’s subsequent collapse and bankruptcy — are the result of systematic embezzlement. WizSec attempted to confirm as much earlier in an early 2015 study it conducted on the Gox collapse was even confirmed by the WizSec study. WizSec concluded that the majority of the missing Gox coins were stolen by someone on the inside. The report was in consonance with the earlier finding by Yomiuri Shimbun that the coins were lost due to fraud rather than an external hack.

Japan has High Rate of Conviction, Tough Luck Mark Karpeles

Mark Karpeles has been in custody for six weeks, and now faces potential incarceration for more than ten years. Interestingly, the proportion of prosecuted cases going to trial in Japan have a high success rate. Japan has a low rate of acquittals and high rate of convictions. Thus, given Japan’s track-record, Karpeles may have ran up against some tough luck.

Does Mark Karpeles deserve to go to prison? Let us know in the comments below!