Report: Mt.Gox CEO Karpeles had sole control over exchange's code and accounts

Home » Report: Mt.Gox CEO Karpeles had sole control over exchange's code and accounts

mtgox-newkkIn an article filed on Reuters today, reporter Sophie Knight paints a complex portrait of Mt.Gox CEO Mark Karpeles. Far from a criminal mastermind or con man, Karpeles is depicted as man who is “shy and fearful of confrontation” whose “escapism into virtual worlds was accompanied by what some former associates describe as a lack of interest in how running afoul of law and regulation could threaten his business and reputation.”

After acquiring the then-small Mt.Gox from creator Jed McCaleb in 2011, the site exploded in popularity, growing from 3,000 to 50,000 users in a matter of months. As Knight tells the story, Karpeles was completely unprepared to run such a fast-growing company, or to build the massive code base needed to the keep the site secure. According to Roger Ver, Karpeles “wasn’t ever focused on Mt. Gox like he should have been.”

According to the story, pulled from interviews with Mt.Gox insiders speaking on condition of anonymity, Karpeles never allowed his staff to have access to the site’s source code or other inner workings. Although the exchange had a staff of 30 in the Tokyo office, it was still very much a one-man show.

They also became frustrated as they waited for Karpeles to authorise decisions or make progress on simple tasks. Developers, stuck without direct access to the Mt. Gox source code, resorted to playing video games, people inside the company at the time say. … Employees were also concerned that Karpeles’ tight grip on all company affairs was causing a bottleneck: he was the only person who could access the exchange’s bank accounts and bitcoin holdings and resolve requests by traders to cash out.

The report also claims that Karpeles refused to share access to Mt.Gox’s wallets, “leaving him as the only person able to piece together the passwords, written on paper stored at his home, the office, and an undisclosed location.” According to sources at Tokyo PR firm Mandalah, which worked with Mt.Gox, Karpeles showed a “lack of interest in outreach and business growth,” and refused to share information with potential investors.

Even as other competing exchanges began to appear, cutting into Mt.Gox’s business with more sophisticated trading systems, Karpeles appeared to have limited interest in developing his site. Instead, the report claims, Karpeles’ attention in the months leading up to the implosion of the exchange were focused on the planned
‘Bitcoin Cafe’ on the ground floor of the company’s offices.

Karpeles was planning to serve quiche and apple pies he’d made himself in the cafe, which would also showcase a point-of-sales system he had spent hours tinkering with, a former employee said. The cafe never opened.

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