Tokyo police arrest French CEO of bitcoin exchange MtGox over billions in missing virtual currency

Japanese police yesterday arrested Mark Karpeles, head of the MtGox bitcoin exchange, after a series of fraud allegations led to its spectacular collapse and hammered the reputation of the digital currency.

France-born Karpeles, 30, was suspected of manipulating data on the exchange's computer system in 2013 to falsely create about US$1 million, a spokesman for the Tokyo police said.

Earlier, Kyodo News and other Japanese media said police were also checking his possible involvement in the disappearance last year of nearly US$390 million worth of the virtual currency, at current exchange rates.

It was not clear if there would be more charges against Karpeles, who reportedly denied the allegations.

The global virtual currency community was shaken by the shuttering of MtGox, which froze withdrawals early last year because of what the company said was a bug in the software underpinning bitcoins that allowed hackers to pilfer them. Investigators were understood to suspect Karpeles knew details about the missing bitcoins, which were reportedly transferred to an account controlled by him - without notifying depositors.

The top-selling Yomiuri newspaper also said police suspected he repeatedly transferred clients' bitcoins into his own account for speculative trading.