Mt Gox chief Mark Karpelès faces rearrest in bitcoin probe
Japanese police investigating the disappearance of nearly $500m of bitcoins are poised to rearrest the French founder of the Mt Gox virtual currency exchange amid questions about the purchase of a $48,000 four-poster bed.
Before the exchange collapsed in 2014, sending shockwaves through the global bitcoin community, Mt Gox was the largest such trading platform in the world.
Mark Karpelès, who was initially accused of manipulating the Mt Gox computer system and inflating the size of his own company account, has been in police detention in Tokyo without formal charges since the beginning of August.
People close to the matter said police on Friday will issue a fresh warrant for Mr Karpelès’s arrest on the different charge of embezzlement — a change that grants investigators a further three weeks to interrogate their suspect.
The rearrest will extend a process known informally to police and prosecutors as shomusen — the “war of attrition” waged by investigators seeking a confession from their detainee. A lawyer for Mr Karpelès said that his client denied the original charges and has made no confession under questioning.
But after three weeks of interrogation, said those close to the matter, police believe they have enough evidence to accuse Mr Karpelès of embezzlement, alleging he misappropriated $2.6m of deposits from the trading accounts of Mt Gox customers. A substantial portion of that money is thought to have been used to buy software rights on behalf of the company.
However, Y6m, according to police allegations, was diverted to the purchase of a bed. Police suspect the bed was intended for the personal use of Mr Karpelès.
But a lawyer for Mr Karpelès said the deposits were used for investments in new businesses while the bed was purchased as interior decoration for his guesthouse, both of which were meant as marketing tools to promote the use of bitcoins.
The Y6m bed appears to have been part of an effort by Mt Gox to impress potential clients and glamorise the trading of the virtual currency.
“It’s too much of a stretch to call this embezzlement,” said Mr Karpelès’s lawyer.
“Despite the long detention period, the fact that investigative authorities could only come up with these reasons to make their case for embezzlement is evidence that Mark was not involved for personal reasons in the disappearance of massive cash and bitcoins,” he added.
The Tokyo Metropolitan Police Department declined to comment.
Behind Mr Karpelès’s arrest is a mystery that continues to elude the Japanese authorities and a host of independent investigators.
The collapse in 2014 laid bare a company where, say independent investigators, a range of baffling activities had occurred.
Foremost was the absence from the Mt Gox accounts of what was thought at the time to be 850,000 bitcoins — a disappearance that could theoretically represent the single biggest cyber theft yet committed. Mr Karpelès has not been accused of bitcoin theft.
Legal sources said the police use of embezzlement charges to extend Mr Karpelès’s detention was a sign he had failed to provide any significant information on the missing bitcoins and that, after a year, that side of the investigation was still yielding few results.
The Tokyo Metropolitan Police Department declined to comment.
Behind Mr Karpelès’s arrest is a mystery that continues to elude the Japanese authorities and a host of independent investigators.
The collapse in 2014 laid bare a company where, say independent investigators, a range of baffling activities had occurred.
Foremost was the absence from the Mt Gox accounts of what was thought at the time to be 850,000 bitcoins — a disappearance that could theoretically represent the single biggest cyber theft yet committed. Mr Karpelès has not been accused of bitcoin theft.
Legal sources said the police use of embezzlement charges to extend Mr Karpelès’s detention was a sign he had failed to provide any significant information on the missing bitcoins and that, after a year, that side of the investigation was still yielding few results.
Via http://www.ft.com/intl/cms/s/0/f4595a04-471b-11e5-af2f-4d6e0e5eda22.html#axzz3jNrGQSAz
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