September 11, 2015
TOKYO (AFP) - Japanese prosecutors on Friday charged the head of collapsed Bitcoin exchange MtGox with embezzlement, Jiji Press news agency said, amid fraud allegations over the disappearance of hundreds of millions of dollars worth of the virtual currency.
The charges, which could not be immediately confirmed, come after France-born Mark Karpeles, 30, was taken into police custody in Tokyo last month over the affair. It was unclear if the indictment related to all or a part of the missing money.
He has been held without formal charge for six weeks, as allowed under Japanese law.
Karpeles was first taken into custody over claims he fraudulently tinkered with data and transferred funds to other firms controlled by him dozens of times between 2011 and 2013.
He was later rearrested for allegedly pocketing about 321 million yen ($2.7 million) worth of Bitcoin deposits, extending an initial three-week incarceration during which time police likely grilled him over the incident.
Tokyo-based MtGox froze withdrawals in early 2014 and was later shuttered over the missing money, which it said was linked to a bug in the software underpinning Bitcoins that allowed hackers to pilfer them.
The exchange -- which once boasted it handled around 80 percent of global Bitcoin transactions -- filed for bankruptcy protection soon after the cyber-money went missing.
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.
Bitcoins are generated by complex chains of interactions among a huge network of computers around the planet, and are not backed by any government or central bank, unlike traditional currencies.
Backers say virtual currencies allow for an efficient and anonymous way to store and transfer funds online. But critics argue the lack of legal framework governing the currency, the opaque way it is traded and its volatility make it dangerous.
Bitcoin's reputation was also damaged when US authorities seized funds as part of an investigation into the online black market Silk Road.