Former Mt. Gox CEO’s Journey Led Him To A New Crypto Exchange

Former Mt. Gox CEO Mark Karpeles is launching a new crypto exchange this month. The exchange, EllipX, was founded in Poland in April of this year. As minor compensation (or maybe just a promotional move), all MtGox customers from 2010-2014 will be eligible for a special discount on trading fees. For security purposes, the exchange will consist of separate segmented groups handling trading, brokering, and storing assets. 

“... I see… one entity that deals with the trading on the market, and brokers located in different countries providing localized service, while the trading entity will only deal with trading. The actual movement of hands on crypto will happen through clearing houses, basically companies like BitGo, that would still be separated from brokers,” - Karpeles explained. 

Last week, Karpeles also introduced a “state-of-the-art” EllipX Wallet based on multi-party computation technology that eliminates the need for passphrases. On top of this, he is also working on Ungox, a independent non-profit organization based in France that will provide a rating system for crypto projects and, among other things, is going to investigate major players like Tether.

Kapeles believes that as the MtGox distribution has started, his time has come to move. He remains sure we now have technology that would have prevented MtGox’s collapse, for example, custodians and HD wallets, but it is not commonly used due to a lack of information, and he is set to change that.

“I can say very confidently that Mt. Gox hack wouldn't have happened if we had even some of the tools we have today. We could have provided public seed access to an accountant for real-time monitoring of transactions, which would not only have prevented the Mt. Gox hack but also allowed us to detect suspicious activity much earlier,” - believes Karpeles.

Regardless of Karpeles’s personality and public attitude toward his new projects, he obviously has ‘crisis’ experience and has gone through tough security lessons. Hopefully, this, together with his entrepreneurial and blockchain expertise, will be enough to provide his new users with a valuable and viable product. 

 “I am on my path, from my previous era, to creating the blockchain industry I envisioned years ago,” - he added.

Karpeles’ major creation, Mt. Gox crypto exchange, which was also based in Poland, used to handle over 70% of all Bitcoin transactions worldwide when it collapsed in 2014. The company reported losing almost 750,000 of its customers’ bitcoins and around 100,000 of its own due to an alleged exploit. The investigation into the hack is still ongoing, with Russian hacker Alexander Vinnik being one of the main suspects. This June, after significant and repeated delays, the Mt. Gox trustee announced the commencement of repayments. Following the announcement, the price of BTC plunged. Many experts expect that the release of such large sums (140,000 BTC and 140,000 BCH, according to our estimates) will add selling pressure and distort the market, while others believe that most of the coins transferred will be held by creditors.

Over the last two months, some users reported receiving repayments and the market apparently absorbed the impact. Those who missed adding their crypto exchange account information have been given an extended chance to register with the deadline now September 30. Afterwards, the trustee is expected to start selling BTC to obtain cash for fiat repayments. 

After the Mt.Gox collapse, Japanese prosecutors sought a 10-year sentence for Karpeles. Contrary to expectations, and despite the average Japanese conviction rate being around 99%, Karpeles was acquitted on the most serious charges. After being held locked up and questioned for nearly a year, he received only a suspended sentence for tampering with financial records. At some point, there were also suspicions that he was the creator and administrator of the Silk Road's drug marketplace.

Karpeles still lives in Japan, although his projects are mainly based in Europe. Over the last decade, he worked as a CTO on virtual private networks at London Trust Media and on a virtual desktop environment at Shells.com. Last year, he was appointed as the Minister of Technology for Joseon, “a sovereign cybernation.”