Japanese police arrest CEO of MtGox Bitcoin exchange one year after its demise

Mark Karpeles of Mt.Gox arrested in Tokyo

Will we finally get to know what happened to the 744,408 bitcoins lost by Mt.Gox?

Do you remember Mt.Gox? Once upon a time, during the heydays of Bitcoin, Mt.Gox Bitcoin Exchange was considered to be the top Bitcoin exchange in the world. It rose from the ranks to become one of the biggest exchanges in Bitcoin before collapsing into a heap, just as rapidly in 2014.

The entire Mt.Gox saga is blamed on a certain Mark Karpeles by the bitcoin lovers and bitcoin community because Mark Karpeles is the head of Mt.Gox Bitcoin Exchange.

After more than a year after being offline and owing the $390 millions to Mt.Gox stakeholders, including the investors and bitcoin depositors in lost bitcoins, the Japanese police on Saturday finally arrested Mark Karpeles

A spokesman for the Tokyo Police said that France-born Karpeles, 30, was suspected of manipulating data on the exchange’s computer system in 2013 to falsely create about $1.0 million, a petty amount considering the amount of bitcoins lost by the exchange.

The police are also investigating his possible involvement in the disappearance of 744,408 Bitcoins which equals to a whopping $390 million at current rates. It was not immediately clear if the Tokyo police would press for more charges against Karpeles, who has so far denied any involvement in the missing bitcoins.

The Bitcoin which was once making daily news headlines and new highs in 2014 was completely shaken out of stupor when Mt.Gox happened. The Bitcoin which was trading at $1500.00 at the start of the year never really recovered from the body blow dealt by the Mt.Gox saga.

You can read all our articles on the Mt.Gox saga here.

Mt.Gox and its owner, Karpeles had at that time alleged that there was a bug in the software underpinning Bitcoins that allowed hackers to pilfer them. This bug was supposedly exploited by the hackers to pilfer 744408 bitcoins from the exchange.

On Saturday, local media, citing police, said investigators suspect Karpeles knew details about the missing Bitcoins which were reportedly transferred to an account controlled by him — without notifying depositors.

Japan’s top newspaper, Yomiuri carried a report stating police suspect that Karpeles repeatedly transferred clients’ Bitcoins into his own account for speculative trading.

The exchange — which once boasted of handling around 80 percent of global Bitcoin transactions — filed for bankruptcy protection soon after the cyber-money went missing, admitting it had lost 800,000 bitcoins amounting to $387 million.

Karpeles later said he had found some 200,000 of the lost Bitcoins in a “cold wallet” — a storage device such as a memory stick that is not connected to other computers.

Mt.Gox never really recovered from the fraud or hack and officially declaring itself as bankrupt. As soon as Karpeles announced Mt.Gox was filing for Bankruptcy proceedings, the depositors and investors started baying for his blood. The investors of Tokyo-based exchange demanded answers, and called on the firm to publicise its data so that hackers around the world can help analyse what happened at MtGox.

“They say it’s under investigation. That’s all they say,” a French investor told AFP last year at a creditors’ meeting which was held after the alleged hack attack on Mt.Gox in Tokyo. “They seem to refuse to make public more precise information about MtGox’s own (information) and how and when it was stolen, if it was really stolen.”

On his part, Karpeles tried his best to avoid the law by refusing to travel to the United States, where it was certain that he would be arrested for questioning for the fraudulent dealings at Mt.Gox.

Hopefully the bitcoin lovers, users and investors, depositors in Mt.Gox, who lost their hard earned bitcoins will finally know what went wrong at Mt.Gox and whether Karpeles was actually responsible for ruining the exchange.

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