Forex in this article
• Mt.Gox went bankrupt in 2014, Karpelès was given a suspended sentence
• Karpelès wants to share his experiences in a crypto rating agency
• Industry insiders doubt Karpelès’ project’s chances of success
Mt.Gox is probably a shimmering term for most Bitcoin investors from the very beginning: Founded in Tokyo in 2007 by Jed McCaleb as a platform for the exchange of playing cards, the company, under the leadership of Mark Karpelès, transformed itself after just one year into a Bitcoin stock exchange. Within a few months, the small startup became the world’s largest trading place for the first cryptocurrency – before the rapid crash of the platform followed in 2014.
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Mt.Gox shocks the crypto world with mega bankruptcy in 2014
As early as 2013, Mt.Gox got into financial difficulties that could hardly be solved. As of February 7, 2014, the crypto exchange then stopped Bitcoin payouts. The worst fears were then quickly confirmed: the website was no longer accessible from February 25, 2014, and Mt.Gox was unable to pay. According to research by the Tokyo police, of the 650,000 missing Bitcoins, only 7,000 were stolen by foreign hackers, but the lion’s share was probably embezzled by Mt.Gox insiders themselves. Thousands of crypto investors have been left with their losses. The bankrupt Karpelès was ultimately sentenced to four years’ suspended sentence in Japan for making false statements, after having been in custody for a total of nine months in 2015 and 2016.
Rating agency planned for crypto exchanges: Karpelès surprises with a new project
As the “Handelsblatt” reported, the 36-year-old Karpelès is now remorseful. The former Bitcoin star apparently wants to pass on his negative first-hand experience with upheavals on crypto exchanges to large institutional and private investors. More specifically, Karpelès is currently raising money for a rating agency for crypto exchanges, which intends to offer a paid newsletter in addition to a free version. This should provide more detailed information about the operator, the legal conditions and the technology used by the respective crypto exchanges.
In fact, the crypto market has exploded in the course of the crypto hype of the past few years and has become increasingly confusing: there are now more than 1,000 trading centers for Bitcoin, Ether and Co. “I’m trying to make sure that something like Mt. Gox doesn’t happen again,” Karpelès recently described his goal, according to “Handelsblatt” at a briefing in Tokyo. “If I say something is wrong, maybe a lot of people will believe it.” It remains to be seen to what extent Karpelès can rely on the trust of crypto investors in view of the Mt.Gox insolvency.
The name of his agency is “UnGox”. This is an obvious reference to Mt.Gox. Now Karpelès apparently wants the opposite of “goxen”, which is how the crypto world describes the Bitcoin fraud of Mt.Gox.
Industry insiders are skeptical about Karpelès’ chances of success
Industry experts are extremely skeptical as to whether the rating agency of the former crypto star will actually meet with high demand. The founder of the fintech community Tokyo Fintech Norbert Gehrke expresses his skepticism to “Handelsblatt”. “If he sees a business model there, then good luck. I can’t really imagine such a rating agency as a source of profit,” says Gehrke. There are already several similar services, so the crypto analyst CoinGecko has been publishing a trust score of 1 to 10 for crypto exchanges for a long time. In addition, it is the market that decides on trustworthiness – and in particular the capital-intensive institutional investors: “I don’t see the value of a rating agency on stock exchanges where the market has already decided,” says the German fintech expert. Institutional investors already accounted for two-thirds of the volume at the large US crypto exchange Coinbase; these had previously thoroughly dealt with the crypto exchange during internal audits. Furthermore, the first beginnings of UnGox are not very promising: According to information from the “Handelsblatt”, the Delaware-registered startup currently has nothing more than a website on which every click leads to a subscription to the paid newsletter.
However, there is no question that crime continues to be a major problem when it comes to cryptocurrencies. As the “Handelsblatt” quotes the analysis company Chainanalysis, fraudsters stole digital coins worth 14 billion US dollars last year alone. So it’s obvious that many crypto exchanges are suffering from security issues, but whether Karpelès’ rating agency will be able to solve them remains to be seen.
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