Japanese police arrest CEO of MtGox Bitcoin exchange

TOKYO, Aug 1, 2015 (AFP) – Japanese police on Saturday arrested Mark Karpeles, head of the MtGox Bitcoin exchange, after a series of fraud allegations led to its spectacular collapse and hammered the digital currency's reputation.

A spokesman for the Tokyo Police said France-born Karpeles, 30, was suspected of manipulating data on the exchange's computer system in 2013 to falsely create about $1.0 million.

Earlier Saturday, Kyodo News and other Japanese media said police were also investigating his possible involvement in the 2014 disappearance of nearly $390 million worth of the virtual currency, at current exchange rates.

It was not immediately clear if there would be more charges against Karpeles, who reportedly denied the allegations.

The global virtual currency community was shaken by the shuttering of MtGox, which froze withdrawals in early 2014 because of what the firm said was a bug in the software un- derpinning Bitcoins that allowed hackers to pilfer them.

On Saturday, local media, citing police, said investigators suspect Karpeles knew details about the missing Bitcoins which were reportedly transferred to an account controlled by him -- without notifying depositors.

The top-selling Yomiuri newspaper also said police suspect that Karpeles repeatedly transferred clients' Bitcoins into his own account for speculative trading.

The exchange -- which once boasted of handling around 80 percent of global Bitcoin transactions -- filed for bankruptcy protection soon after the cybermoney went missing, admitting it had lost 850,000 coins worth 48 billion yen ($387 million). They were worth about $480 million at the time of the disappearance.

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.