MtGox chief Mark Karpeles arrested for fraud

Japanese police have arrested the head of the failed bitcoin exchange MtGox in connection with the disappearance of £250m worth of the virtual currency after the firm’s collapse in 2014.

French-born Mark Karpeles is also accused of accessing the Tokyo-based exchange's computer system in February 2013 to add $1m (£640,000) to his cash account.

Karpeles, who acquired MtGox from founder Jed McCaleb in March 2011, has told the Wall Street Journal the allegations are false and he would “of course deny” them, while other reports have quoted his lawyer as saying Karpeles denies any wrongdoing.  

If found guilty, Karpeles could face up to five years in prison, or a fine of up to ¥500,000 (£2,576).

In its backruptcy filing in February 2014, MtGox said 750,000 customer bitcoins, then worth around £256m, and another 100,000 belonging to the exchange were stolen by hackers who exploited a software security flaw.

Karpeles later said he had recovered 200,000 of the lost bitcoins that had been stored offline, according to the Guardian.

The missing 650,000 bitcoins is about 7% of all the bitcoins in existence, reports the BBC.

MtGox has never published any information about the hack to back its claims and Karpeles has reportedly refused to travel to the US for questioning in connection with MtGox’s collapse.

According to the latest reports, Karpeles has not yet been charged formally in Japan, where he can be detained for 23 days without being charged.