Mt. Gox’s Mark Karpelès on Navigating Crypto Exchange Bankruptcy

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Show Notes


– Mark joined Bitcoin in 2010, only a few hundred people in the space

– Learned about Mt. Gox which was founded by Jed McCaleb

– Ended up buying Mt. Gox from Jed

– When Mark joined there were 3 dozen customers, a few months later there were 60,000

– After a few more years they got to 1 million customers

– Found out some of the Bitcoin from Mt. Gox were missing

– Filed for bankruptcy

– All fiat has now been converted to Japanese yen, Bitcoin and Bitcoin Cash stand

FTX Bankruptcy

– Cobie: “Do you see this being another 10 year stint before people can see a cent on the dollar?”

– It will be very different

– Filed for Chapter 11 — US law, only relevant in US

– Companies will fight to get bankruptcy jurisdiction

– SBF claims he was basically forced into bankruptcy – did Mark ever feel pressured into bankruptcy? And is he doing the right thing?

– The lawyers did pressure Mark — “the only option was filing for bankruptcy”

– Mark: “As it turns out, bankruptcy helps a lot in protecting against lawsuits. I mean, it’s made for it”

– Sam opening withdrawals to Bahamas prob a good play cause they’d sue

– Ledger: seems like Sam purposely pushing for being seen as stupid and delusional and denying any criminal intent — think this is on purpose or truly lost it?

– Mark thinks its likely a good strategy if its on purpose

Day 1 Filing

– What’s the importance?

– Important — looks like accounting was done on Slack using custom emojis, fairly common in Japan

– Japan is very paper based — Mark had to fill out paper forms, approve them and bring it to the bank

– FTX did not have a full time accountant on board

– Mark: “Being a $30B company that makes no sense no me”

John J Enron Guy

– People seem to think he’s looking at this as a whale sized meal for him and his buddies

– Do you think people circle around this as vultures to try and get money out of it?

– Mark: He’s getting a large amount of pay on this, but at the same time a large amount of work, and however this plays out is going to reflect on him

– It’s not going to go on forever, most of the costs will come in the beginning


– Cobie: “When these things happen, you have a lot of unusual ties that can look like corruption…Bahamas withdrawals, US political donations…in the Mt. Gox days there were corrupt DEA agents trying to steal money and cash out through Mt. Gox. How does corruption and systemic powers play out in these situations and why do they seem so frequent?”

– Mark: “Money is going to corrupt people. This is very well known.”

– Corrupt agents stole money from silk road and tried to cash out through Mt. Gox, then tried to take down Mt. Gox to get rid of any evidence

– Mark: “When you’re guilty you know you’re guilty”

FTX Timeline

– Ledger: “You think this will take a year before they get to anything productive and start liquidating assets?”

– Mark: they filed for Chapter 11, so there might be part of this business that can be sold

– Mark: “Its a very long process so the complexity is not going to help at all”

Mark to SBF

– Cobie: “You sent this tweet ^ what would you like to tell him?”

– A lot of it is to be quiet

– The donations stuff…dark money stuff

– He’s probably much better off not saying anything at all

– Mark: “Criminal law is all about intent, if he keeps talking about intent he’s going to lock out options in the future”

– There’s no way he didn’t know about the backdoor

On Proof of Reserves

– When you heard about FTX did you have flashbacks? What’s your opinion on how the industry has evolved?

– Mark didn’t have any PTSD, he was not shocked or surprised

– Kraken was one of the first to do proof of reserves

– Binance now saying they’re gonna do it

– Mark: “It’s very likely that in a few months no one will care again and people will stop doing it”

– Mark has made it his mission in life to make sure there is no second Mt. Gox


– Cobie: “How do you feel about DeFi trying to recreate the centralized experience?”

– Mark likes it generally

– Mark: “If you are using a stablecoin you are not decentralized”

– Cobie: “Did you have confidence that the Bitcoin market would survive after Mt. Gox?”

– They were very close to solving all problems when they found out about the missing Bitcoin

– A lot of price is driven by news and how hopeful people are about Bitcoin

– Mark: “If Mt. Gox crashed in 2012 it would have been much much worse. There would have been no other ways to buy and sell Bitcoin besides OTC”

Mt. Gox

– Sold about 50,000 Bitcoin at seemingly random periods

– When Mt. Gox filed for bankruptcy the Bitcoin was marked to Japanese yen

– Bitcoin went up so much, that during a liquidation the shareholders (Mark) would have gotten over $1B

– He fought against this because everyone would have hated him

– Mark: “Maybe worth it for $1T but $1B, not enough” LMAO

– He fought to give everyone back their Bitcoin instead of cash equivalent marked at time of bankruptcy

– Even if Bitcoin goes to $0 tomorrow then Gox people will still get the amount of money they were expecting back


– Alameda put a lot of money into venture — do people get rights to that basket of assets or try to liquidate the deals?

– Mark thinks too many assets to try to get distribution back in a fair way

– They bought so much, would be like getting a slice of the entire crypto market

OG Stuff

– Mark calling Craig “Faketoshi” Wright a fraud

– Cobie: “Do you feel deceived by Jed? Do you think he gave you the exchange in bad faith?”

– Mark didn’t have much communication with Jed

– Didn’t know about the 80,000 Bitcoins missing for many months

– Ledger: “Has anyone ever dumped on everyone as much as Jed? Passed liability for Mt. Gox, dumped XRP over 8 years, etc”

Silk Road

– People thought Mark was Dread Pirate Roberts for a long time

– Cobie: “Do you think Ross was treated fairly?”

– Mark: “If I had a say on this I would say he should be free”

– Thinks he was made an example out of

– The person who was the target of the murder for hire contract testified in favor of Ross

Bitcoin Ethos

– Do you think governments really want to kill Bitcoin to maintain control of fiat currency?

– There are definitely government actors that think like that

– Mark doesn’t think any country is doing it as a united front against Bitcoin

Mark Detention for Mt. Gox

– Mark went to pre-trial retention for about a year after Mt. Gox

– Spent 4.5 months at police station in Japan, interrogated every day, 8 hours a day the entire time until they were done with him

– Bought a calculator and redo accounting and was able to refute the charges, sent to lawyer and made their argument collapse

– Very hard to get a not guilty verdict in Japan, but its possible if you are willing to fight for many years

– Cobie: “Does Sam go to jail in your opinion?”

– Mark: “I’d guess its 90% likely”

– He’s probably going to get just enough because people are angry but not too much because he’s got good friends

Miscellaneous Q&A

– Cobie: “Did you have any interactions with Satoshi and do you have any guesses at who she is?”

– Yes, talked to him on some forums

– Mark: “As to who Satoshi is, I don’t think we should be looking into it. He made it very clear when he was leaving [he should remain anonymous]”

– Cobie: “So you do know but you’re not telling us, got it”

– Ledger: “Is it weird thinking about 1 Bitcoin as a lot of money when you were slinging around thousands”

– Yes, absolutely wild

– Think he made 70,000 Bitcoins out of all the web hosting from Mt. Gox

– Cobie: “Did you ever plan to put Litecoin on Mt. Gox or was it all a ruse?”

– Mark: “We were planning to” but regulation got in the way

– Ledger: “Can you tell us once and for all what you were thinking during this picture?”

– Mark: “It was actually during the bankruptcy, I was very stressed, lots of lawyers and people in front of me — at that time they were still playing nice but this was probably the most stressful time”

Final words

– Mark: “A lot of people in the crypto community are really happy to help others when they have issues — people are very open to talking. Except FTX I’d suggest they don’t talk too much” lmao

Notes by Kevin and Luke

Music by GiovanniPickle