Mark Karpeles Arrested: CEO Of Mt. Gox Bitcoin Detained For Illicitly Adding Funds To His Account – No Mention Of Missing Bitcoins?


Mark Karpeles, the chief of now-bankrupt Bitcoin exchange in Japan, was arrested today over suspicions he illicitly added money to his account by accessing secure severs. Surprisingly, there seems no mention of the huge number of Bitcoins that suddenly vanished when the Mt. Gox exchange collapsed.

Japanese police have detained Karpeles, the head of the now-defunct Mt. Gox bitcoin exchange company. According to Japan’s Kyodo News Agency, citing the Metropolitan Police Department, Karpeles is suspected of “accessing the exchange’s computer system and falsifying data to change the outstanding balance.”

It is being claimed that the Mt. Gox CEO had illegally used the Bitcoin platform to add $1 million to an account under his control, reported MSN.

Issuing a very small statement, the Japanese police explained, “Mr. Karpeles had unjustly inflated the balance of an account held under his name by manipulating transaction records on a system that Mt. Gox used to swap Bitcoins for dollars. He created false information that $1 million had been transferred into the account, when in fact it had not been.”

The online financial platform, which Mark Karpeles himself created, was hugely popular for generating, storing, and exchanging Bitcoins until it collapsed. It is still not exactly known what happened to nearly half a billion dollars in Bitcoins that the company said vanished from its computer systems, reported the New York Times.

The collapse of Mt. Gox was one of the biggest setbacks for the still emerging virtual currencies. Once considered one of the most democratic ways to generate money online, Bitcoin’s reliability took a huge hit following the debacles. Many countries that were contemplating acceptance of Bitcoin as a legitimate virtual currency and even taxing its transactions suddenly fell silent.

However, before the Mt. Gox exchange, which was created by Mark Karpeles, filed for bankruptcy, the company said it had lost control of over 850,000 Bitcoins, most of which belonged to its clients. The company claimed these had either been lost or stolen by hackers. At the time, the total value of the Bitcoins was estimated to be $460 million. The company also claimed it had lost $27 million in cash. Of the 850K Bitcoins, Mt. Gox eventually managed to trace and recover about 200,000 within its own systems, valued at $56 million at current rates, reported CNN.

Though Mark Karpeles has apologized, he has always claimed that he did not steal any of his clients’ assets. In response to the news of his arrest, Karpeles reached out to the Wall Street Journal, stating that all the accusations levied against him were “false” and he would “of course deny” them.

[Image Credit | Tomohiro Ohsumi / Getty Images]

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