He was later rearrested for allegedly pocketing about 321 million
yen ($2.7 million) worth of Bitcoin deposits, extending an
initial three-week incarceration during which time police likely
grilled him over the incident.
Japanese prosecutors have charged the head of collapsed Bitcoin exchange MtGox with embezzlement, Jiji Press news agency says © AFP Karen Bleier
Bitcoin's reputation was also damaged when US authorities seized funds as part of an investigation into the online black market Silk Road.
Karpeles was first taken into custody over claims he fraudulently tinkered with data and transferred funds to other firms controlled by him dozens of times between 2011 and 2013.
Tokyo (AFP) - Japanese prosecutors on Friday charged the head of collapsed Bitcoin exchange MtGox with embezzlement, Jiji Press news agency said, amid fraud allegations over the disappearance of hundreds of millions of dollars worth of the virtual currency.
The charges, which could not be immediately confirmed, come after France-born Mark Karpeles, 30, was taken into police custody in Tokyo last month over the affair. It was unclear if the indictment related to all or a part of the missing money.
Karpeles later said he had found some 200,000 of the lost Bitcoins in a "cold wallet" -- a storage device, such as a memory stick, that is not connected to other computers.
Tokyo-based MtGox froze withdrawals in early 2014 and was later shuttered over the missing money, which it said was linked to a bug in the software underpinning Bitcoins that allowed hackers to pilfer them.
He has been held without formal charge for six weeks, as allowed under Japanese law.
Bitcoins are generated by complex chains of interactions among a huge network of computers around the planet, and are not backed by any government or central bank, unlike traditional currencies.
The exchange -- which once boasted it handled around 80 percent of global Bitcoin transactions -- filed for bankruptcy protection soon after the cyber-money went missing.
Backers say virtual 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.
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