Former Mt. Gox CEO Mark Karpelès Reveals Details of 2014 Collapse and Japanese Detention

Bitcoin Magazine

Former Mt. Gox CEO Mark Karpelès Reveals Details of 2014 Collapse and Japanese Detention

In late 2025, Mark Karpelès, ex CEO of Mt. Gox, lives a quieter life in Japan, building a VPN and an AI automation platform. As Chief Protocol Officer at vp.net—a VPN that uses Intel’s SGX technology to let users verify exactly what code runs on servers—he works alongside Roger Ver and Andrew Lee, the founder of Private Internet Access. “It’s the only VPN that you can trust basically. You don’t need to trust it, actually, you can verify”. At shells.com, his personal cloud computing platform, he’s quietly developing an unreleased AI agent system that hands artificial intelligence full control over a virtual machine: installing software, managing emails, and even handling purchases with a planned credit card integration. “What I’m doing with shells is giving AI a whole computer and free rein on the computer”, a brilliant idea, really. AI agents on steroids.

The contrast with his past could not be starker. Fifteen years ago, Karpelès was the reluctant king of Bitcoin’s trading world, running Mt. Gox at a time when the exchange processed the vast majority of global bitcoin trades.

His journey began innocently enough in 2010. Operating a web hosting company called Tibanne under the brand Kalyhost, Karpelès received a request from a French customer based in Peru who was frustrated with international payment hurdles. “He’s the one who discovered Bitcoin, and asked me if he could use Bitcoin to pay for my services … I was probably one of the first companies to implement Bitcoin payments back in 2010”.

Roger Ver, an early evangelist, became a frequent visitor to Karpelès’ office. Unknowingly, his servers also hosted a domain linked to Silk Road—silkroadmarket.org—purchased anonymously with bitcoin. That connection would later fuel investigations: U.S. authorities briefly suspected Karpelès of being Dread Pirate Roberts himself. “That was actually one of the main arguments why I was investigated by U.S. law enforcement as maybe the guy behind the Silk Road… They thought that I was Dread Pirate Roberts”. The association complicated public perception and even surfaced in Ross Ulbricht’s trial, where, according to Karpelès, Ulbricht’s defense efforts briefly tried to cast doubt by linking Karpelès to the marketplace.

In 2011, Karpelès acquired Mt. Gox from Jed McCaleb, who went on to found Ripple and Stellar. The handover was marred from the start. “Between the time I signed the contract and the time I got access to the server, 80,000 bitcoins were stolen… Jed was adamant that we couldn’t tell users about it,” Karpelès alleged to Bitcoin Magazine. McCaleb faced no criminal liability for the Mt. Gox case, though he has been sued civilly and has been part of the public discourse around the case. Nevertheless, as far as Karpelès is concerned, he inherited a platform plagued by poor code and technical issues.

Mt. Gox exploded in popularity, becoming the primary on-ramp for millions entering Bitcoin. Karpelès maintained strict policies, banning users linked to illicit activities like drug purchases on Silk Road. “If you’re going to buy drugs with Bitcoin, in a country where drugs are illegal, you shouldn’t”, Karpelès told Bitcoin Magazine.

The Mt. Gox empire crumbled in 2014 when hacks—later tied to Alexander Vinnik and the BTC-e exchange—drained over 650,000 bitcoins. Vinnik pleaded guilty in the U.S. but was exchanged in a prisoner swap and returned to Russia without a trial, leaving evidence sealed. “It doesn’t feel like justice has been served,” said Karpelès, a moment that makes you wonder about the odd political value of Vinnik to the Russians. The 650,000 bitcoins stolen remain at large. 

The fallout was swift. Arrested in August 2015, Karpelès endured eleven and a half months in Japanese custody—a system notorious for its rigidity and psychological pressure. Early detention mixed him with colorful cellmates: Yakuza members, drug dealers, fraudsters. He passed the time teaching English, and inmates quickly dubbed him “Mr. Bitcoin” after spotting blanked-out headlines about him in newspapers given to them by the prison guards. One Yakuza even tried recruiting him, slipping a phone number for post-release contact. “… Of course I’m not going to be calling that,” Karpelès laughed.

The psychological tactics were brutal. Japanese police employed repeated rearrests: after 23 days, detainees were led to believe release was imminent, only to face a new warrant at the door. “They really make you think that you’re free and yeah, no, not you’re not free… That’s actually quite a toll in terms of mental health”.

Transferred to Tokyo Detention Center, conditions worsened: over six months in solitary confinement on a floor shared with death row inmates. “It’s still quite painful to spend more than six months in solitary confinement,” he recalled. Forbidden from letters or visits if claiming innocence, he coped by rereading books and writing stories—”the stuff I wrote is really crappy. I wouldn’t show it to anyone,” he said when asked if he would ever publish his writings. Armed with 20,000 pages of accounting records and a basic calculator purchased for his case, he dismantled embezzlement charges by uncovering $5 million in unreported revenue in the exchange.

Paradoxically, prison improved his health dramatically. Chronic sleep deprivation—often just two hours a night during his workaholic Mt. Gox days—gave way to regular rest. “Sleeping at night helps a lot… when I work I’m used to only sleeping two hours a night, which is a very, very bad habit” (00:22:18). Emerging physically transformed—”shredded,” as observers noted at the time—he surprised the Bitcoin community with fresh photos showing peak condition.

Released on bail after disproving key charges, Karpelès was convicted only on lighter record-falsification counts at the end of the ordeal. The Silk Road links had complicated perceptions, with Ross Ulbricht’s defense briefly attempting to implicate him to create plausible deniability for Ulbricht. Public narratives often painted him as complicit in Bitcoin’s dark side, despite his policies against it.

Emerging in 2016, rumors swirled of vast personal wealth from Mt. Gox’s remaining assets—once estimated at hundreds of millions or even billions due to Bitcoin’s price surge. Yet Karpelès says he receives nothing. The bankruptcy’s pivot to civil rehabilitation allowed creditors to claim in bitcoins, distributing value proportionally. I like to use technology to solve problems, and so I don’t really even do any kind of investment or anything like that because I like to make money by constructing things. To just get a payout for something that’s essentially a failure for me would feel very wrong, and at the same time, I’d want customers to get the money as much as possible.” Creditors, many now receiving far more in dollar terms due to Bitcoin’s rise, continue waiting.

Today, Karpelès collaborates with Roger Ver—the early visitor turned business partner—who recently settled U.S. tax claims for nearly $50 million. “I’m happy for him that he’s finally getting things cleared,” Karpelès said.

Today, Karpelès says he owns no bitcoin personally, though his businesses accept it as a form of payment. Discussing the current state of Bitcoin, he critiqued centralization risks in ETFs and figures like Michael Saylor: “This is a recipe for catastrophe… I like to believe in crypto in mathematics and different things, but I don’t believe in people”. On FTX: “They were running accounting on QuickBooks for a potentially multi-billion dollar company, which is crazy”.

From Bitcoin’s epicenter—hosting Silk Road links, onboarding the world, enduring Japan’s harshest detention—to building verifiable privacy tools, Karpelès’ arc reflects the industry’s maturation. His story marks the first roar of Bitcoin into mainstream culture, a time when his leadership as CEO of Mt. Gox placed him at the center of the storm. Clearest of all, his builder mindset remains a great example of the type of engineer and entrepreneur attracted to Bitcoin in those early days. 

This post Former Mt. Gox CEO Mark Karpelès Reveals Details of 2014 Collapse and Japanese Detention first appeared on Bitcoin Magazine and is written by Juan Galt.