Tokyo police served another arrest warrant on the chief executive officer of the bankrupt Mt. Gox Co. bitcoin exchange on Friday, suspecting he embezzled some ¥321 million ($2.6 million) worth of funds entrusted by clients.
Mark Karpeles, 30, who was arrested earlier this month on suspicion of manipulating virtual currency data to pad his own cash account, allegedly pocketed the clients’ money in his company’s bank account by transferring it elsewhere in October 2013.
Of the ¥321 million, Karpeles is suspected of having spent ¥315 million to acquire the right to develop and sell computer graphics software from a Tokyo firm and about ¥6 million to purchase a luxury canopy bed for his home.
Mt. Gox kept its own funds and clients’ money in the same bank account.
Karpeles, a French national, set up the business in 2011 and built it into the world’s biggest bitcoin exchange.
But 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 around May 2013, prompting clients in the United States to withdraw money entrusted to Mt. Gox in droves.
In February, Mt. Gox abruptly shutdown 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.
Mt. Gox kept customer and corporate funds in the same bank account, and the police deemed the cash used by Karpeles after the company’s liabilities exceeded assets on its balance sheet as actually being the customers’ funds.
Karpeles was arrested on 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.