Yesterday the former CEO of infamous Tokyo-based cryptocurrency exchange Mt. Gox announced the release of a new crypto initiative. The new company, called EllipX (pronounced “el-ip-ex”), consists of the EllipX Wallet and the EllipX Exchange.
French Bitcoin veteran and Tokyo resident Mark Karpeles promises that his latest entrepreneurial venture will provide products that are more secure and accessible than other cryptocurrency tools currently on the market.
Old problems, new solutions
The issue of security is all too familiar to Karpeles. His announcement comes a decade after one of the biggest scandals in Bitcoin’s history, where approximately 850,000 bitcoin were stolen from Mt. Gox. Mt. Gox, helmed by Karpeles in 2011, was the largest Bitcoin exchange by volume at the time. Karpeles is still considered an early pioneer in the industry.
Cryptocurrency has long been plagued by the problem of balancing user experience and security. Even the most basic component—being able to access your tokens—is something the industry has yet to figure out an elegant solution for. Karpeles says, “When you first start out in crypto, they ask you to write [the full crypto key] on an ordinary piece of paper and protect it with your life…it’s not the best user experience.”
Using Multi-Party Computation (MPC), Karpeles developed a system that allows the user to set up the wallet in a similar way to mobile banking, eliminating the risk and clunky user experience associated with traditional cryptocurrency management. The value of this new technology and other emerging technologies is not lost on Karpeles, claiming, “If MPC had existed at the time of Mt. Gox, the bankruptcy wouldn’t have happened.”
“There’s nothing to write on paper, it’s actually a lot safer.”
Learning from the past
Mt. Gox was unable to recover from the hacking, and filed for bankruptcy in 2014. Since then, Karpeles has been in a lengthy process of repaying users who had lost some or all of their bitcoin balances during the downfall of the platform. Users are in luck; due to the rise in value of Bitcoin, many creditors were able to recover many times more the value of their initial holdings.
“After Mt. Gox I didn’t expect to be involved in crypto again, but I’ve had a lot of people from the industry…telling me to come back and make use of the experience I’ve accumulated with Mt. Gox.”
“I believe it’s time for me to turn the page and use the experience to make things more user friendly and more secure in the crypto industry.”
Japan’s uncertain future in cryptocurrency
The crypto industry is booming globally, and Karpeles and others are keen on making cryptocurrency as easy as managing a checking account. However, there is at least one country that conspicuously doesn’t share this goal: Karpeles’ adoptive home country, Japan.
EllipX will not be available in Japan due to how the country has been handling crypto license applications. “You can apply for a license, and there’s a lot of applications that were made in the last 6 to 8 years, but none have been approved,” says Karpeles.
Not only have they not been approved, but many applications fail to get any response at all.
“My strength alone, or only one company pushing [for regulations to be more open in Japan] is not going to be enough, but I do know there are others, so we will continue pushing into that direction.“