Police are to serve a fresh arrest warrant on the chief executive officer of the bankrupt Mt. Gox Co. bitcoin exchange on Friday, investigative sources said. Mark Karpeles is suspected of embezzling clients' funds totaling ¥321 million.
Karpeles was arrested earlier this month on suspicion of manipulating virtual currency data to pad his own cash account. The sources say the clients' cash, held in his company's bank account, was transferred elsewhere in October 2013
Mt. Gox kept customer and corporate funds in the same bank account, and the police deemed that the cash Karpeles used after the company's liabilities were found to exceed its assets in fact belonged to its customers.
The 30-year-old founder of the bitcoin exchange is believed to have spent ¥315 million of the embezzled money on obtaining the development and distribution rights of computer graphics software from a Tokyo firm and purchasing for his home a luxury canopy bed worth around ¥6 million, they said.
Karpeles, a French national, set up the business in 2011 and built it into the world's biggest bitcoin exchange.
The company incurred major losses and its debts exceeded assets in August 2013 after the U.S. Department of Homeland Security seized its assets in U.S. bank accounts in around May 2013, prompting clients there to withdraw their money in droves.
In February the following year, Mt. Gox abruptly shut down all bitcoin transactions and filed for court protection, saying it had lost about 850,000 bitcoins, worth around ¥48 billion at the time, and around ¥2.8 billion in funds entrusted by clients.
Karpeles was arrested Aug. 1 on suspicion of manipulating computer data and increasing the outstanding balance of his dollar account within the virtual currency exchange in February 2013 by a total of $1 million.