Former Mt Gox CEO Karpeles arrested in Japan
Authorities pursuing fraud theory in collapse of venerable bitcoin exchange
Mark Karpeles, one-time CEO of bankrupt bitcoin exchange Mt Gox, has been arrested by Japanese police as part of an investigation into the disappearance of over $500m, online media reported.
Karpeles was arrested on Saturday on suspicion of falsifying the balance of Tokyo-based Mt Gox, which at the time of its collapse was the world's largest virtual-currency trading hub. The eccentric French-born expat bought an 88% stake in the company in 2011 and went on to become a founder and board member of the Bitcoin Foundation.
Bitcoin filed for bankruptcy in the US in February 2014, claiming that a security flaw in the transaction process within the Mt Gox software platform had led to the disappearance of 750,000 bitcoins in customer funds and a further 100,000 owned by Mt Gox itself.
The missing bitcoins are reportedly valued at $480m and Mt Gox also claims $27m is missing from its Japanese bank accounts.
Karpeles subsequently claimed to have recovered 200,000 of the lost bitcoins. He insists the funds' disappearance was the work of hackers during a widely publicised DDoS attack on the exchange in March 2013, but Mt Gox employees had expressed concerns, in the months running up to the attack, that customer money was being used to cover company costs.