Japan charges Bitcoin exchange CEO with embezzlement

Bitcoins are not backed by any government or central bank, unlike traditional currencies

French-born Mr Karpeles was first taken into police custody in Tokyo over claims he fraudulently tampered 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 roughly J¥321m (US$2.7M) worth of Bitcoin deposits.

MtGox defunct

Tokyo-based MtGox closed last year after admitting that 850,000 coins – worth roughly US$480m at the time, or US$387m at current exchange rates – had disappeared from its digital vaults.  The exchange filed for bankruptcy protection soon after the cyber-money disappeared, leaving angry investors calling for answers. Despite initially saying that a bug in the software underpinning Bitcoins had enabled hackers to pilfer them, Mr Karpeles later claimed he’d found some 200,000 of the lost coins in a ‘cold wallet’ – a storage device that is not connected to other computers.

Lack of legal framework

Financial watchdogs around the world are struggling to decide how to regulate digital money, and the case has presented a complex challenge to Japanese police. Investors have called on the firm’s court-appointed administrators to publish its data, so that experts can help to analyse what happened at MtGox. Source: Yahoo News