Fresh warrant resets clock for grilling MtGox CEO over missing bitcoins
PUBLISHED : Monday, 24 August, 2015, 2:15am
UPDATED : Monday, 24 August, 2015, 2:15am
Agence France-Presse in Tokyo
MtGox CEO Mark Karpeles has been held for three weeks. Photo: AP
The arrest of MtGox boss Mark Karpeles has begun to shed light on the defunct bitcoin exchange after hundreds of millions of dollars in virtual currency vanished from its digital vaults last year.
But as details of a lengthy investigation by Japanese police trickle out, at least one crucial question remains unanswered: where is the money?
On Friday authorities issued a fresh arrest warrant for Frenchman Karpeles over claims he stole several million dollars from clients, including about US$48,000 allegedly spent on a bed. Karpeles, 30, who has reportedly denied the allegations, was initially taken into custody earlier this month and has been held without formal charges for three weeks, as allowed under Japanese law. A fresh warrant resets the clock on how long police can hold and grill him over Tokyo-based MtGox's missing bitcoins.
So far, police have accused Karpeles of manipulating data and stealing sums that amount to just a fraction of the 850,000 coins - worth around US$480 million at the time, or US$387 million at current exchange rates - that disappeared last year.
MtGox, which once handled around 80 per cent of all bitcoin transactions, filed for bankruptcy protection soon after the cyber-money went missing, leaving a trail of angry investors.
The company initially said there was a bug in the software underpinning bitcoins that allowed hackers to pilfer them.
Karpeles later claimed he had found some 200,000 of the lost coins in a "cold wallet" - a storage device that is not connected to other computers.
But the whereabouts of the money and Karpeles' involvement appear far from solved.
"If there were instances of mismanagement or fraud like this carried out by Mark Karpeles, then he should be held accountable," bitcoin investor Kim Nilsson said. "[But] if these charges against [him] don't adequately explain where all the bitcoin ... money went, then there are still unresolved questions, quite possibly additional crimes and criminals, that must be investigated further."
Investors have called on the firm's court-appointed administrators to publicise its data so that experts can help analyse what happened at MtGox.
But the case presented a complex challenge to Japanese police. Unlike traditional currencies, bitcoins are generated by complex chains of interactions among a huge network of computers around the planet.
"The bitcoin case is really an embezzlement case, but embezzlement has to involve a 'tangible object'," said Hisashi Sonoda, a criminal law professor at Japan's Konan University. "Japanese criminal law treats digital currency as 'data', not what we call 'tangible object' in a legal sense."
