The CEO of failed bitcoin exchange, Mt. Gox, Mark Karpeles, has been charged in Japan in relation to the loss of almost £250 million worth of the virtual currency last year.
The charges relate to the embezzlement of 850,000 bitcoins, totalling a worth of around £250m last March. As a result of the loss, all user accounts were frozen so the company could investigate the missing currency and then the organisation was forced to file for bankruptcy a month later.
Japanese courts say Karpeles accessed his own company’s computer system to falsify data so he could artificially create around $1 million (£640,000) in Bitcoin, falsifying data on its outstanding balance.
The charges were placed as the six-week criminal holding period was coming to an end, as set out in Japanese law.
However, Karpeles previously claimed the issues were caused by system bugs and not by any hack into the system or other malicious activity, and his lawyer denied his client had done anything illegal.
Following the bankruptcy filing, MtGox announced it found 200,000 of the missing bitcoins (worth £74 million) in a ‘cold’ digital wallet, meaning the total number of bitcoins mislaid was reduced to 650,000 – accounting for around seven per cent of all bitcoins in existence.
After investigating further into Karpeles’ actions, Japanese police believe he may have illegally spent 1.1 billion yen (£5.7 million), by sending them to other firms he was involved in, according to Japanese public broadcaster NHK.
Mt. Gox was once responsible for processing 80 per cent of global Bitcoin transactions before it folded, but the loss of such volumes of currency led to its decline and mistrust in the digital currency.
A French investor told AFP news agency last year at a creditors’ meeting in Tokyo: “They say it’s under investigation. That’s all they say. They seem to refuse to
Originally appeared at: http://www.itpro.co.uk/strategy/25082/mt-gox-ceo-charged-with-embezzlement-in-japan