Japanese authorities arrested Mark Karpeles, chief of collapsed bitcoin exchange Mt. Gox, on allegations of manipulating the company’s computer system to inflate the balance of his personal account.
Mark Karpeles, the former CEO of the collapsed bitcoin exchange Mt. Gox, was arrested in Tokyo over the weekend.
The 30-year-old French national is being held on charges of unlawfully extracting and using private electromagnetic records, Japanese media The Yomiuri Shimbun reported.
In a separate report, the New York Times quoted a statement from the Tokyo Metropolitan Police, saying they believe Karpeles manipulated transaction records in Mt. Gox’s trading system to inflate the balance of an account under his name.
“He created false information that $1 million had been transferred into the account, when in fact it had not been,” the police said.
Investigators said Karpeles accessed the trading system, which was hosted in the United States, in 2013 and altered the data in his personal account twice to inflate the total cash value in it by $1 million.
Police, however, also plan on questioning Karpeles on suspicion of misusing $8.8 million (¥1.1 billion) of his clients’ money, according to Yomiuri. Karpeles’s company, Mt. Gox, was once the world’s largest exchange platform for bitcoin. The Tokyo-based company filed for bankruptcy in February 2014, saying it had lost 750,000 of its clients’ bitcoins and 100,000 of its own, which are worth more than $450 million at the time.
But according to Yomiuri, police discovered that a total of ¥1.1 billion yen was transferred from Mt. Gox’s account to several accounts, including that of Tibanne as well as Mt. Gox’s parent company also managed by Karpeles, and a software company affiliated with Mt. Gox, among others. A portion of the money was also allegedly used to open Bitcoin Café and another portion was allegedly used to pay Mt. Gox’s business partners.
Detectives also said Karpeles used ¥130 million from the account to pay for his apartment rent and furniture, among other things, the newspaper reported.
When the troubles at Mt. Gox came to light last year, it led to a worldwide panic among users and exchanges of the virtual currency. At the time, Karpeles said his company fell victim to hackers who exploited the site’s “transactional malleability.” The company later said it found 200,000 of the missing bitcoins but it wasn’t clear how much the exchange’s clients will be able to retrieve.
Karpeles came to Japan in 2009 and bought the bitcoin exchange, which was then used as a trading platform for playing cards, in 2011.