Just after sunrise on August 1st, Tokyo police stormed into a sleek two-story townhouse on a quiet residential street in Japan’s capital and arrested Mark Karpeles, the 30-year-old head of Mt. Gox, the largest bitcoin exchange in the world. By the time they led the doughy, pale Frenchman away, the police could barely make their way through the throngs of reporters closing in outside.
Just three months earlier, when I met Karpeles here, the scene was considerably calmer. He was baking apple quiche, a recipe passed down from his grandmother. Scruffy and chipper, his dark hair pulled back in a loose ponytail, he wore baggy green pants and a flour-dusted black T-shirt with the words ‘This Isn’t Even My Final Form.’ System of a Down played from his radio. Apples and bread crumbs covered the living-room table he otherwise used for his model train set.
Karpeles was the accidental emperor of bitcoin, a hapless geek who, as much to his own surprise as others’, became the most powerful lord of digital cash. During his reign, bitcoin, the leading form of virtual currency, rose in value from approximately a quarter to more than $1,200. The Wall Street Journal estimated that at one point Mt. Gox was processing 80 percent of all bitcoin transactions in the world. At its peak, the company traded more than $4 million a month. Tyler Winklevoss — one of the famed twins who sued Mark Zuckerberg over the founding of Facebook for a $65 million settlement and is among the bullish investors in digital money — says Mt. Gox was “the most important and prominent property in bitcoin.”
But in February 2014, it was discovered that a half-billion dollars worth of bitcoins simply vanished from Karpeles’ exchange, leaving customers around the world unable to withdraw their funds. It’s the largest online heist in history. (Estimates vary on the exact amount. Many have reported $450 million; Karpeles says it could be as high as $650 million.) Some — including even those who worked closely with Karpeles — suspected it was an inside job. “We had an ongoing joke: ‘Take pizza to Mark when he’s in jail,’ ” Ashley Barr, the first employee at Mt. Gox, tells me. “We always assumed that was where he’d end up.”
The Japanese police arrested Karpeles for allegedly padding his digital accounts with $1 million worth of fake bitcoins and fleecing another $8.9 million from Mt. Gox customer deposits. He’s still being investigated for what, if any, role he had in the disappearance of the half-billion in bitcoins.
Karpeles, over several months of interviews, denied culpability. “A lot of people seem to think that someone at Mt. Gox was evil,” he says. “I know that I didn’t steal anything. I mean, if I had, like, $650 million in bitcoin, or even a fraction of this, I wouldn’t be here.”