French head of failed Bitcoin exchange faces theft charges in Japan

The French former head of major Bitcoin exchange MtGox faces fresh criminal charges in Tokyo over allegations he stole money from clients before the exchange collapsed last year.

Mark Karpèles, former head of Tokyo-based MtGox, is being held and questioned by Japanese authorities AFP

A new arrest warrant was issued Friday for Dijon-born Mark Karpelès, 30, who has been held in custody for the last three weeks without formal charges, as allowed under Japanese law.

With his time in custody set to end this week, an arrest warrant on a new charge of embezzlement would reset the clock on how long police can hold him and grill the self-described computer geek over hundreds of millions of dollars worth of missing Bitcoins.

Tokyo-based MtGox, which once boasted it handled around 80 per cent of global Bitcoin transactions, froze withdrawals in early 2014 after 850,000 coins disappeared. The missing digital currency was valued at around 480 million dollars (426 million euros) then and 387 million dollars at current exchange rates.

The company said at the time that the missing coins were linked to a bug in the software that allowed hackers to pilfer them.

MtGox filed for bankruptcy protection in Japan in February 2014.

Karpelès was first taken into custody earlier this month over claims he fraudulently tinkered with data and transferred funds to other firms controlled by him dozens of times between 2011 and 2013.

A lawyer for Karpelès has told news organisations around that world that his client denies the original charges and has made no confession under questioning.

The new charges are over allegations he stole 2.6 million dollars (2.3 million euros) from clients, including about 48,000 dollars he allegedly spent on a luxury canopy bed.

Investors whose bitcoins disappeared have been attempting to stand up legal cases in order to gain some form of compensation.

Earlier this month a Japanese court ruled against a man hoping to claim compensation over lost Bitcoins, saying the virtual currency cannot be owned.

Meanwhile a class-action lawsuit in North America was settled out of court last year.

Bitcoins are generated by complex chains of interactions among a huge network of computers around the world and are not backed by any government or central bank, unlike traditional currencies.

Backers say digital currencies allow for an efficient and anonymous way to store and transfer funds online. But critics argue the lack of legal framework governing the currency, the opaque way it is traded and its volatility make it dangerous.