Japanese prosecutors have charged Mark Karpeles, former head of the bitcoin exchange Mt. Gox, with embezzlement.
Karpeles was arrested by authorities in early August due to accusations that he purportedly falsified data and transferred millions of dollars of bitcoin deposits to other firms controlled by him from 2011 to 2013.
As allowed under the Japanese law, the former boss of Mt. Gox was held by the public prosecutor's office in Tokyo without a formal charge for six weeks. Karpeles was rearrested on Friday, Sept. 11, and formally charged by the authorities as the six-week period was about to expire for allegedly funneling 321 million yen, or about $2.66 million, in bitcoins into companies he owned months before the company collapsed.
Media reports claimed the money was allegedly spent on buying computer software development rights as well as an expensive custom-built bed.
The former CEO told the press last month that allegations against him were false. Lawyers of the former boss also claimed that their client had done nothing wrong when he was the head of the company.
In February 2014, the Japan-based company collapsed, saying it discovered that it could not locate over 850,000 bitcoins worth about £311 million, or about $480 million during that time, saying a bug was present in the software, which allowed hackers to steal the bitcoins. At the present exchange rates, the amount is translated to about $387 million, according to sources. However, the company later confirmed it had found 200,000 bitcoins in what it called a "forgotten" digital wallet.
The greater part of the missing bitcoins belonged to its customers.
At the time the company collapsed, it was deemed the biggest exchange of bitcoins across the globe. It was reported that it managed around 70 percent of the transactions.
Mt. Gox then filed for bankruptcy both in the United States and Japan. According to sources, its debts totalled about $64 million.
Bitcoin is a virtual currency. It is made from a complicated cryptographic protocol as well as a global network of computers. These oversee and verify which bitcoins have been spent by whom.
At the moment, the Mt. Gox former head is still being held by the Japanese authorities. However, media reports say he is allowed to petition the court for "release pending trial."
"I don't know why people are trying to portray me as some kind of person who didn't care about ongoing issues at that time and escaped reality through miscellaneous tasks," read a blog post Karpeles shared in May. "Oh wait, actually some people are trying to portray me as the bad guy because that fits their understanding of things. Of course, let's just take the guy we know and make him the bad guy so we don't have to search for the culprit."
Photo: Zach Copley | Flickr
