The Mt. Gox saga continues to get murkier.
Mark Karpeles, the CEO of the collapsed bitcoin exchange, is facing fresh embezzlement charges on Wednesday after authorities revealed a portion of Mt. Gox’s missing funds was spent on a good bang, Japanese media reported.
The 30-year-old Frenchman was arrested in Tokyo last August on allegations of tinkering with company’s data to inflate the balance of his personal account between 2011 and 2013. According to The Japan Times report, Karpeles transferred ¥20 million ($166,000) in client money to his own bank account.
Karpeles reportedly used the money to pay for his personal expenses, including an unspecified sum on prostitutes. Jiji Press, citing police, said it involved “several women whom he met at venues that offer sexual services.”
Japanese authorities slapped embezzlement charges against Karpeles last month, which extended his initial three-week incarceration under the Japanese law. Prosecutors said the man pocketed a total of ¥321 million ($2.7 million) by transferring clients’ funds deposited at Mt. Gox’s bank account to other accounts.
The fresh charge against Karpeles means more time for authorities to grill him over the demise of Mt. Gox.
The Tokyo-based firm was once the world’s largest exchange platform for bitcoin until it filed for bankruptcy last year, claiming it had lost 850,000 of its bitcoins, which are worth more than $450 million at the time.
Karpeles has been claiming innocence since day one, saying hackers exploited the site’s “transactional malleability.” However, the man has also been very vocal about his total control over the Mt. Gox server, which cast doubt on his innocence.
Karpeles later announced they had found 200,000 of the missing bitcoins in a cold storage, but it wasn’t clear how much the exchange’s clients were able to retrieve.
Karpeles is facing up to five years in prison for moving $1 million alone, but his lawyers believe the arrests have been unwarranted. Karpeles wrote a post back in June in which he insisted that “the current situation is nothing but another disaster waiting to happen.”
Karpeles came to Japan in 2009 and bought the bitcoin exchange, which was then used as a trading platform for playing cards, in 2011.