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  (Source: Tokyo Real-Estate)
Time for a career change? Here's what being Bitcoin's beloved robber baron buys you

After our two part exposé on Bitcoin robber baron Mark Marie Robert Karpelès, the fallen CEO's "MagicalTux" blog was briefly taken over by hackers this weekend, before someone -- perhaps Mr. Karpelès -- shut it down.

I. Mark Karpelès Decides to Stop Sharing After Hack

Fortunately, his accounts of such items as....
  • His secret Apple pie recipe
  • His history of fraud arrests (at least two)
  • Accounts of at least two employers firing him.
  • His fantasies of himself as a superhero
  • His financial problems
  • His 2006 unexecuted plan to commit suicide by hanging himself with a network cable
...are all still very much available.  Just head over to Archive.org and find them all here.  To translate them from French to English, just type:

http://translate.google.com/translate?hl=en&sl=fr&tl=en&u=

...pasting the url of the archive.org link after the "u=".

He subsequently took his Flickr account private:

Flickr

... but you can, of course, enjoy the pictures we have posted as per U.S. Fair Use laws (given the legal/academic relevance of the case, see: TITLE 17 > CHAPTER 1 > § 107).

A quick note before we get started -- Redditors have discovered that apparently Mr. Karpelès owns a trademark on the term "Bitcoin" in Europe (and formerly Australia, but he forgot to renew that one).  So even if Mr. Karpelès goes to jail, unless he is somehow stripped up of the trademark, he "owns" the term Bitcoin -- in Europe, at least.

II. We Have No Bitcoins (Or So We SAY)

But the hack wasn't just a defacement attempt.  An unauthorized blog entry was posted, likely the Russian/Eastern European ring that exploited Mr. Karpelès' servers via his failure to patch his beloved Gentoo Linux.

Magical Tux hacked
Oh look it's another post from Mr. Karpelès.  Wonder if he is going to tell us all how great he is?  Oh, wait, he just got hacked.  Whoops.

In the blog they write:

First and foremost, this is not Mark Karpeles. F**k that b**ch-titted motherf*****.

It’s time that MTGOX got the bitcoin communities wrath instead of Bitcoin Community getting Goxed. This release would have been sooner, but in spirit of responsible disclosure and making sure all of ducks were in a row, it took a few days longer than would have liked to verify the data.

Above you will finding download link and a mirror used without asking from Mark Karpeles very own blog.magicaltux.net.

Included in this download you will find relevant database dumps, csv exports, specialized tools, and some highlighted summaries compiled from data. Keeping in line with fucking Gox alone, no user database dumps have been included.

Repost and share this info before it’s gone. Lots of people, including us, lost money and coins. Upvote this post.

We stole no bitcoins. There were none to steal.

The blog appears to show Mt. Gox has 951,116 Bitcoins -- a fortune worth $611.6M USD at current exchange rates.  Of this, 500,000 is estimated to be customer Bitcoins.

The hackers comment:

That fat f**k has been lying!!

Karpeles Mt. Gox account

Of course the man had a history of lying, according to his former employers.  A discipline letter from 2004 states:

I found it particularly troubling that you would lie [to me] when i asked you about what you were working on and that you [did not stop] your use of this software to chat after several requests for explanation [of your behavior].

If correct, this would be a wild twist as Mt. Gox and Mr. Karpelès claim to be bankrupt, with basically no Bitcoins.

III. Picture Me Rolling

The leak also includes a personal address for Mr. Karpelès.

Karpeles
Hi guys, just off to my Tokyo penthouse.
[Image Source: Mark Karpelès on Flickr; Fair Use clause TITLE 17 > CHAPTER 1 > § 107]

Googling the Meguro Ward, Tokyo property, we found a nice description of it on Houserep-Tokyo.com, and it sounds quite posh:

The luxury high rise residence "La Tour Aobadai" is located in southern Shibuya area, closer to Nakameguro / Ikejiri Ohashi. Just like other "La Tour" series, it has amenities such as "Concierge Service at Reception Desk","Valet Service", "Sky Lounge", "Party Room", "Fitness Room", "Trunk Room", "Garden Lounge", etc. and a great view. Only its location might be inconveniece because the closest station "Ikejiri Ohashi" & "Shinsen" are a kind of mainors (an express trains don't stop at the stations), and the major one "Shibuya" station is 14 min. walk away. However, this La Tour Aobadai especially provides "Shuttle Buss" directly goes to Shibuya station from the building !!

Meguro Ward Karpeles

Rents start at around ¥350,000 (~$3390 USD) per month (so roughly $40,600 USD per year), but that's just a one bedroom flat.  Given Mr. Karpelès feelings of entitlement and insecurity, it seems doubtful that he'd be "slumming it" with such an entry level model.  He's likely inhabiting one of the swankier suites, which go for around ¥500,000 to ¥600,000 ($4,843 to $5,812 USD) per month (so close to $70k USD per year).

La Tour
La Tour Aobadai is a dream home, if you can afford it. [Image Source: RealEstate-Japan]

Oh and parking is ¥42,000 (~$400 USD) a month ($4,800+ USD per year) -- plus, you know, tips for the valet and such.

You'd need to earn -- or steal -- a lot of Bitcoins to afford that kind of high roller living.  But that's chump change if you happen to be the self-ordained "king of Bitcoin."

Here's a video tour of the property:



Here's a view from the CEO's window:


Karpeles view
[Image Source: Mark Karpelès on TwitPic; Fair Use clause TITLE 17 > CHAPTER 1 > § 107]

With all these views, you can almost picture what life might be like as Bitcoin's biggest scammer.  And by the looks of it, life is pretty spectacular.

IV. Pay Me An Extra Fee And You'll Get Your Bitcoins... I Swear*

Even if the allegation that Mr. Karpelès is faking insolvency proves inaccurate, there's the little nagging issue of how he continued to charge customers the equivalent of tens of thousands of dollars in fees even after he clearly had ceased all withdrawals and had no intention of repayment (from Oct. to Jan.)...


Typically Mr. Karpelès charged 0.0001 BTC/kB for Mt. Gox withdrawals.  But after he claimed his exchange ran out of funds, he had the boldness to charge 0.005 BTC/kB, multiplying his fees by a factor of 50.

Karepeles
Even after he claims to have lost all his customer funds, Mr. Karpelès wasn't afraid of charging them a fee 50 times his normal rate for the promise they "might" get their money back.  "Might", it appears, turned out to be "might not."
[Image Source: Mark Karpelès on Flickr; Fair Use clause TITLE 17 > CHAPTER 1 > § 107]

Considering the extent the Bitcoin baron had already likely defrauded customers, taking them for a couple of thousand more Bitcoins seemed gratuitous.  But then again, Mr. Karpelès had them on a hook and desparate, just like a classic email scam.

Check out this chart from Blockchain of all Bitcoins transactions identified as exchange fees per month. 

Bitcoin fees Karpeles

Notice the sharp spikes towards the end of 2013? That's likely Mr. Karpelès' handiwork.

Based on that chart, he might have taken 1,000-2,000 BTC ($640K to $1.28M USD) at most, but for those that paid and got nothing, that must have been an especially bitter blow.

Such a double dipping scam is characteristic of top scammers worldwide, including the infamous Nigerian email scams, which would seek to pile on with more requests and promises of reward, even after the initial gains.

Judging by his resume, Mr. Karpelès appeared to be too lazy and emotionally unstable to work in his chosen profession.  But after being fired twice, quitting twice, being arrested at least twice, having several hosting startups flop due to poor customer service, he finally figured out what he was good at -- becoming Bitcoin's biggest scammer.

V. Bitcoin Cafe

But, hey, he needs the money, right?

After all he still hasn't finished his $1M+ USD into his "Bitcoin Cafe", a French restaurant in his new Cerulean Towers Tokyo Office high rise, which housed the now-bankrupt Mt. Gox and Tibanne, Ltd. (its parent).  Wired writes:

Karpeles was obsessed with a new project: The Bitcoin Cafe. Inspired by a French bistro, it would be a stylish hang-out located in the same building as the Mt. Gox offices, a very-new-looking building of metal and glass within walking distance of Tokyo’s largest train station. You could drop by for a beer or some wine, and — using a cash register proudly hacked by Mark Karpeles — you could buy it all with bitcoin. When WIRED tried to meet with Karpeles and Mt. Gox at their offices this past October — and a company representative turned us away, saying that legal reasons prevented Mt. Gox from talking to the press — the placard in the lobby of the building already identified the cafe. This company representative said it would open by the end of the year. It never did.

Bitcoin Cafe
Bitcoin Cafe [Image Source: Wired]

An insider describes to Wired how the disgraced CEO fiddled while Mt. Gox burned, stating:

[Karpeles] was super-proud of being able to use his hacked cash register with the code he wrote.

Another "inside source" expands upon this theme, telling Wired:

Aside from the cafe, he liked to spend time fixing servers, setting up networks and installing gadgets… probably distracting himself from dealing with the real issues that the company was up against

Alas the cafe's site is offline and its construction has been left unfinished. But never fear, you can always view it in Google's cache.

Bitcoin Cafe

The teaser reads:

The Bitcoin Cafe will be a space for both the casual [and the] formal , with beers, wines, and specialty coffees from around the world.  And it will offer stylish French and global dishes.

The cafe has the ambiance you might encounter in a Parisian deli, or in one of the packed city cafes.  It's casual , but it unusual.  Please stop by to enjoy our lineup shortly, a lineup exclusively prepared for the Bitcoin Cafe.

Opening March 2014

The cafe has yet to open.  Here's another blog that is related to the cafe, which remains active.

Here's a picture of the inside (admittedly blurry) from the Redditor who first spotted the cafe.
Bitcoin cafe peek inside
[Image Source: Reddit/croketg29]

And here's its mail box, right next to the mailbox for Mr. Karpelès' Tibanne (named after his cat):

Bitcoin Cafe
[Image Source: Reddit/croketg29]

From cafes to condos, one thing is for certain; Mr. Karpelès may have had a tough time finding his talent, but his chosen profession (Bitcoin scams) has treated him quite handsomely.  The only headache for him is the question is what comes next.

It should be interesting how the Tokyo Bankruptcy Court takes these developments, though. 

Karpeles outdoors
Mr. Karpelès reportedly fled to Japan after legal trouble in his native France.
[Image Source: Mark Karpelès on Flickr; Fair Use clause TITLE 17 > CHAPTER 1 > § 107]

Mr. Karpelès previously fled to France, under allegations of fraud from a former employer.  He could always repeat that tactic (fleeing to Nigeria, perhaps?), but it's going to be a tough decision.  After all, the life of (ill-gotten) luxury is hard to turn away from.

A reader points out that one of the directories in the zip contains what appears to be Bitcoin-stealing malware.  Like all things Bitcoin, be careful if you download the file, don't click on any strange *.exe files.

The ZIP is available here if you are aware of the risks:
http://89.248.171.30/MtGox2014Leak.zip" rel="nofollow

Source: MagicalTux [blog; hacked, archived]



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

remedy
By Argon18 on 3/10/2014 5:13:50 PM , Rating: 4
What this Karpeles douche bag needs, is to have his anus hacked for many years in a federal prison.




RE: remedy
By chizow on 3/10/2014 5:24:04 PM , Rating: 2
Federal prison for breaking which federal laws? Again, that whole legal tender/government backing argument many made against bitcoin/cryptocurrency in the first place kinda bites prospectors in the ass at this point doesn't it?

Sure he's a douchebag but I have no sympathy for all of those bitcoin zealots who endlessly pumped this dead-end investment vehicle. I only feel bad for those that didn't know any better and got duped into investing in bitcoin based on bad advice from those that should have known better.


RE: remedy
By sorry dog on 3/10/2014 6:47:32 PM , Rating: 2
The SEC made him register as a trader. The Federal Code of Regulation has over 1.4 million pages in it. I'm sure they can find something.

I don't mean hijack, but in case your wondering... it's size increased by 7.4% in first 3 years of Obama's time... wouldn't be be surprised if that's 15% by now...healthcare is now probably 100k by itself.


RE: remedy
By Argon18 on 3/11/2014 11:37:01 AM , Rating: 2
"Federal prison for breaking which federal laws?"

IANAL, but like sorry dog says, he's registered with the SEC as a trading platform. There are strict standards registered trading platforms have to follow. Based on his sloppy code and sloppy work ethic, I doubt he followed them.

Secondly, he has filed for bankruptcy protection here in the US. If he misrepresented his assets, which it sounds like he has, that's good for a lengthy stay in a federal pen.


RE: remedy
By Reclaimer77 on 3/12/2014 1:39:46 AM , Rating: 2
It's called "fraud", look it up. Dealing in Bitcoins doesn't mean you're free to be an Anarchist.


RE: remedy
By JasonMick (blog) on 3/10/2014 9:21:27 PM , Rating: 2
quote:
What this Karpeles douche bag needs, is to have his anus hacked for many years in a federal prison.
I understand your frustration but there's virtually no chance he's going to be put in a general penitentiary... He'll most likely be sent to a white collar prison for financial criminals.

Or given the nature of Bitcoin and the difficulty tracing transactions in the absence of certain data, he may get away with it.

Some of the blame of course needs to be shared by bitcoin investors who trusted such a questionable person, site, and service with their hard earned money. Mt. Gox's burned account holders are certainly victims, but to an extent their naivety and idealism put them in that bind.

Investors need to be careful with their bitcoin dealihs as there are now bailout guarantees givenits unofficial status. Hence unless you have proof a binding financial agreement was breached (see: Mt. Gpx and CoinLab), you're otherwise both out of luck and a buck.


RE: remedy
By drycrust3 on 3/10/2014 10:48:20 PM , Rating: 3
quote:
He'll most likely be sent to a white collar prison for financial criminals.

I don't see how he can be prosecuted. Sure, he was in charge of a valuable commodity that vanished, but he was in Japan, and MtGOX is in Japan, so Japanese law prevails. You can't say he stole money because Bitcoins aren't legal tender, and without knowing what the terms and conditions of the EULA are we can't be sure he actually took Bitcoins without authorisation.
I'm guessing that Karples could well escape a jail sentence, at least for the loss of the Bitcoins anyway. He may get jailed for some incidental crime, such as not declaring income on his Japanese tax return, but that could be a minor problem.


RE: remedy
By inperfectdarkness on 3/11/2014 3:25:52 AM , Rating: 3
He's an opportunist. I dispise opportunists...but he's far from unique. Bernie Madoff usurped a lot more capital.

Think about it, MTG, Yu-Gi-Oh, etc...all these card games are RIPE for opportunists to capitalize on schmucks. I remember flipping through the pages of a games magazine a few years back and seeing prices for Yu-Gi-Oh cards. (I played the GBA games, but never collected the cards). Card prices were anywhere from $20 to $200 for cards that I was using in my GBA deck. That convinced me to NEVER collect the cards.

What was even more apparent was that a quality forger could easily replicate these cards (which are virtually devoid of anti-counterfitting measures like actual currency), and easily cash in. Worse, the GAME INVENTOR could use this to underhandedly cash in on "uber rare" cards that only are availble through backwater channels at ludicrous prices.

L. Ron Hubbard should be mentioned here, because he capitalized on Scientology in essentially the same way.

Remember that a fool and his money/wealth/assets/bitcoin portfolio are soon parted. I'm not saying it's a permissable practice--just that opportunism takes many, many forms.


RE: remedy
By NellyFromMA on 3/11/2014 10:53:17 AM , Rating: 3
LOL, you must despise EVERY SINGLE for-profit entity in existence.

There's a HUGE difference between an opportunist, and exploiter, and what you are describing.


RE: remedy
By inperfectdarkness on 3/13/2014 4:44:08 AM , Rating: 2
Actually the term you're looking for is "entrepreneur". I support entrepreneurs; and they are entirely different from opportunists.


stuuuuid
By p05esto on 3/10/2014 9:02:42 PM , Rating: 5
Not sure, but I think if you were stupid enough to buy into Bitcoins then you deserve to get ripped off. We all saw the fall of Bitcoin and that whole seedy mess years ago. Just the fact that you could create the currency yourself with graphics cards was a monumental joke. I don't like scam artists either, but if you give some guy your money with no government backing then what do you expect? Greed always follows money.




Mt. Gox - The Movie
By HeavySnarker on 3/10/2014 5:17:50 PM , Rating: 4
Matt Berry stars as Mark Karpelès
http://www.youtube.com/watch?v=XhFTG7fFwc4




Currency conversion error.
By undefinex on 3/10/2014 7:03:41 PM , Rating: 2
Author made a conversion mistake. The currency is off by a factor magnitude. It was too shocking how high the rental cost was until I look closely at the numbers.

$1 USD is about 100 Yen.
350,000 Yen is approximately $3,390 USD/month.




RE: Currency conversion error.
By protomech on 3/10/14, Rating: -1
RE: Currency conversion error.
By JasonMick (blog) on 3/10/2014 8:38:29 PM , Rating: 1
quote:
Author made a conversion mistake. The currency is off by a factor magnitude. It was too shocking how high the rental cost was until I look closely at the numbers.
Thanks for the heads up... Fixed it. I typically use Google's Currency widget for conversions. In this case human error occurred (me typing a zero), so that was off as were the remaining conversion w changed leading digits.

Got them all fixed now thanks to your comment!

The total (close to 100k a year) is still an impressive figure for rent. You could by a pretty impressive house in many parts of the states for twice that (or four times if you live in Cali).

Clearly his schemes paid off. The penthouse was a nice upgrade from his budget apartment in Shibuya ward.


RE: Currency conversion error.
By xyzzy2 on 3/10/2014 11:32:04 PM , Rating: 2
They are not quite all fixed; the 'basic apartment' rates are still wonky.


Careful with that leaked zip!
By xyzzy2 on 3/10/2014 11:33:04 PM , Rating: 4
The .exe files in the leaked zip are known to have wallet-stealing malware. You might want to rethink linking to it.




Seems strange...
By NellyFromMA on 3/11/2014 10:51:59 AM , Rating: 2
Why does DT focus so much on this guys earnings? Yes, Mt. Gox fell. It was a stated gamble all along. Many people saw this coming long before. Some people gambled anyways, and some won and many other lost. Not at all unlike any other gamble to-date.

This guy started something and profited. It isn't at all a Ponzi scheme so far. So, why is DT covering every little detail about this guy as if its REAL or NEW news?

Maybe you can just change the site name to DailyBitcoin.




RE: Seems strange...
By DominionSeraph on 3/11/2014 4:00:12 PM , Rating: 2
Jason Mick's a train wreck. He brings in views.


By chizow on 3/10/2014 5:25:50 PM , Rating: 2
Yep, straight from a bad episode of any MMO of the last 15 years since Everquest.




Now a shirtless Karpeles?
By Lord 666 on 3/11/2014 12:07:29 AM , Rating: 2
Mick's man crush continues and delves into the soft-porn zone.

Personally, I am more interested in the cat. We need more details on why his cat was so special. Did he own any dogs?




LOL
By Thetruth1983 on 3/10/14, Rating: -1
RE: LOL
By MrBlastman on 3/10/2014 5:04:13 PM , Rating: 2
Because people are greedy and want to believe almost anything if it might make them money. Remember that "tiny little ads" guy on television?

Good old Don Lapre (check Wikipedia) was his name. I knew he was a fraud the first time I saw him. But countless other people... didn't. He bilked millions out of unfortunate suckers. Thankfully he slit his own throat in the end and saved the taxpayers millions in prosecution and incarceration costs.

Will the Bitcoin Billionaire? That remains to be seen. In the end though, no matter what happens, everyone loses since it is rare people get their money back.


RE: LOL
By HeavySnarker on 3/10/2014 5:14:32 PM , Rating: 2
He looks a lot like Douglas Reynholm from the IT Crowd. This would be an appropriate ending: http://www.youtube.com/watch?v=ClzOyAe_O58


RE: LOL
By NellyFromMA on 3/11/2014 10:54:57 AM , Rating: 2
I wonder what virtually all of the posters here look like. I bet there isn't much of a difference.


Nice hack job.
By protomech on 3/10/14, Rating: -1
"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller














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