Mt. Gox CEO faces fresh criminal allegations over Bitcoin theft

Former Mt. Gox CEO Mark Karpeles is being accused of pocketing over $2.6 million in customer funds.


The CEO of once-dominant Bitcoin exchange Mt. Gox is being pursued with a fresh criminal warrant over allegations of Bitcoin embezzlement.

Japanese police are set to re-arrest the former cryptocurrency mogul over accusations Karpeles pocketed $2.6 million in investor Bitcoin (BTC) deposits. As reported by the AFP, a local report from the Yomiuri newspaper said Karpeles will now face questions over the vanishing act performed by Bitcoin deposits worth hundreds of millions of dollars.

At the time of the disappearance the deposits were collectively worth roughly $480 million and roughly $387 million at the time of writing.

Citing investigators, the publication says most of the money allegedly embezzled was spent on software rights -- but also included approximately $48,000 for a luxury bed.

In February last year, the Mt. Gox Bitcoin exchange shut its doors without warning, leaving upwards of 850,000 BTC missing in action. Karpeles originally said a bug in Mt. Gox's systems allowed cyberattackers to spirit away the funds, however, this explanation was not accepted without suspicion in the virtual currency community.

Karpeles later said 200,000 BTC had been "recovered" from an old-style cold wallet, and the existence of an inflation-boosting, bulk Bitcoin-buying bot, dubbed Willy, is yet to be explained.

As a result of the Bitcoin debacle, Mt. Gox filed for bankruptcy in both Japan and the United States -- and 30-year-old Karpeles was later placed under arrest in Japan. Last month, the former CEO was accused of falsifying financial records in Mt. Gox computer systems in order to inflate his own bank account by $1 million.

Karpeles was held in Tokyo for three weeks as investigators questioned him on tampering with Mt. Gox systems and accounts, and while no charges have been levied against the former CEO, a guilty verdict in such a case could result in prison time and a fine of up to 500,000 yen ($4,000).

Under Japanese law, Karpeles can only be held without charge for up to three weeks. However, the inclusion of a fresh warrant means police can now hold him for longer as they continue their investigation.

In July, former Mt. Gox employee Ashley Barr conducted an 'Ask Me Anything' (AMA) forum on Reddit to blow the lid off the Mt. Gox debacle, revealing that his statement -- among others -- led the Tokyo Metro Police to Karpeles' door. According to Barr, Karpeles shared his bank account with investor deposits and was sketchy when asked about the firm's financials. Barr commented:

"Mark was definitely in over his head [..] and didn't have the logic/communicative skills to know how to ask for help. He desperately needed it, but didn't even know it. It was incredibly frustrating."

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