Karpeles Arrest Extended on Fresh Accusations of Embezzlement

Tokyo police have extended the arrest of Mark Karpeles on fresh accusations of misappropriating $2.6 million worth of customer funds.

Tokyo police have extended the arrest of Mark Karpeles, former CEO of defunct bitcoin MtGox, on fresh accusations of misappropriating $2.6 million worth of customer funds.

Karpeles was first arrested three weeks ago on suspicion of manipulating account balances on the exchange. He has also been accused of funneling ¥1.1 billion ($8.9 million) in customer deposits for personal use and to other businesses he operates.

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He has yet to be formally charged with a crime, and therefore can only be legally detained for up to 23 days. The rearrest will give investigators a fresh clock to make progress with their interrogation. Karpeles has thus far denied all charges, and it is believed that police have made little or no progress during the first three weeks of detention, thereby motivating another possible round.

According to Japanese news outlet The MainichiKarpeles denied the latest allegations as well, apparently claiming that he borrowed the funds. “I was intending to repay later,” he reportedly said. His lawyer told The Mainichi that “all the loans were made under the involvement of an accountant, and they are not embezzled.”

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It is not known if the new accusations, which seem similar to those already levied, were deliberately delayed in order to maximize Karpeles’ time in custody for investigators.

Police are curious about the alleged purchase of a four-poster bed for $48,000, suspecting it was intended for personal use by Karpeles. His lawyer claims that the bed was intended for interior decoration at Karpeles’ guesthouse, to serve as a marketing tool to promote bitcoin use.

As with the original arrest, advance reports of impending action were obtained by local media from police sources.

His lawyer has also questioned the grounds for the investigation, noting that during the first detention period, authorities only managed to come up with embezzlement charges and have yet to link his client to the disappearance of 850,000 bitcoins.

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