MtGox boss Mark Karpeles arrested in connection with lost bitcoins
Once one of the largest and most popular Bitcoin exchanges online, Mt. Gox famously closed its doors back in February 2014 but not before lying about what was going on at the time, including claims of system issues and other delaying tactics, before finally claiming that they’d been hacked and that an astonishing 850,000 Bitcoins, worth $480 million at the time of the collapse, had been stolen.
Mt. Gox had they said that it believed it was necessary, for the company and for the healthy growth of the Bitcoin industry, to make efforts to rebuild while fulfilling accountability.
Tokyo Metropolitan Police have arrested Mark Karpeles, the former head of defunct bitcoin exchange Mt. Gox over accusations that he siphoned off $1 million in customer funds to his own bank account.
The fresh allegations emerged after the arrest of Mark Karpeles, its 30-year-old founder and CEO, on Saturday for allegedly manipulating virtual currency data to pad his personal cash account. He was alleged to have misused customer’s money and provide falsified data.
According to the NHK and Yomiuri newspaper, Karpeles is being suspected by the police to have spent around US$8.9 million (AU$12.2 million) of the depositor’s money illegally.
Under Japanese justice system, a suspect can be detained by police for up to three weeks without charge, and during which, the detainee might have to face vehement interrogation in order to get a confession.
“With respect to virtual currencies such as bitcoin, we have gathered information and discussed measures” to regulate it, top government spokesman Yoshihide Suga told a regular press briefing. MtGox, however, said it was due to a bug and he later filed for bankruptcy.
Bitcoin’s reputation was also damaged when U.S. authorities seized funds as part of an investigation into the online black market Silk Road.
Karpeles later said he had found some 200,000 of the lost bitcoins in a “cold wallet” – a storage device such as a memory stick that is not connected to other computers. However, while filing for bankruptcy, the exchange couldn’t clarify if it just lost the bitcoins or if hackers stole it as it clearly had a weak system in place to manage the assets.