The former CEO of Bitcoin exchange Mt. Gox has been arrested

This image was removed due to legal reasons.

Mark Karpeles, the former CEO of Bitcoin exchange Mt. Gox, has been arrested, according to the Wall Street Journal's Takashi Mochizuki.


Karpeles has not been charged, as it is legal in Japan to detain a suspect for 23 days before doing so, Mochizuki says.

But Japanese news service NHK says police believe Karpeles "padded his Bitcoin outstanding balance by illegally manipulating [the Tokyo-based] company's computer system."

And citing an unnamed official, Mochizuki writes Karpeles is suspected of manipulating "the company’s system to inflate [Gox's] assets" in order to settle orders from customers.

When Mt. Gox collapsed last year, Karpeles claimed that there had been a massive hack or leak of company Bitcoin funds on the order of $500 million.

But Mochizuki reports that police now believe "some of the coins that [Karpeles] said were lost may not have existed."

And NHK says "most of the Bitcoins held by the company were sent to another account," the owner of which isn't specified.


The French-born Karpeles, 30, has remained in Tokyo since the exchange's collapse last year, and has continued to weigh on cryptocurrency issues. In June, he wrote a blog post warning that many current exchanges are "a disaster waiting to happen" because they have not properly secured customer funds.

He has also maintained an active Twitter presence at @magicaltux. Here was his most recent Tweet.


Karpeles IM'd Mochizuki stating the current allegations were "false."

NHK has posted footage of the arrest.

Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.