TOKYO — A Tokyo court handed down a 2½-year prison sentence Friday to the former head of Mt. Gox, a cryptocurrency exchange that helped establish bitcoin as a household name before spectacularly imploding amid allegations of mismanagement.


Still, Mark Karpelès, the French national who presided over Mt. Gox’s rise to become the world’s largest bitcoin exchange, will not serve additional time if he remains on good behavior.


The verdict ended a more-than-five-year ordeal for Karpelès, who was found guilty on a charge of falsifying data but innocent of two additional charges of embezzlement and breach of trust. He was arrested in August 2015 and held for almost a year in detention, where he spent months under interrogation by prosecutors who upped the pressure by adding additional charges against him.


His sentence was suspended for four years, meaning he will serve no additional jail time as long as he remains on good behavior.


Critics of Japanese justice said that Karpelès’ experience presented a case study in the system’s faults. Prosecutors first enlisted Karpelès to assist in investigating Mt. Gox’s loss of 850,000 bitcoins, then valued at around half a billion dollars. Before long, their suspicions shifted to Karpelès himself. Karpelès apologized for “weaknesses in the system” but denied that he had taken any of his clients’ assets.


His long detention is a common tactic in Japan, where nearly 99 out of 100 indictments end in conviction — an outcome sometimes obtained through convictions made under duress. In 2017, 88 percent of those who went to trial confessed, according to data maintained by Japan’s Supreme Court.


That pattern has come under increased scrutiny following the arrest of Carlos Ghosn, then chairman of Nissan, in November;...




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