Mark Karpeles, the former CEO of defunct bitcoin MtGox, may be rearrested on fresh charges of misappropriating $2.6 million worth of customer funds.
Karpeles was arrested nearly 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.
He has not been formally charged with a crime, and therefore can only be legally detained for up to 23 days. As this period is set to expire, authorities are seeking to extend his detention in an effort to make progress in their investigation. According to the Financial Times, the process is informally known to police and prosecutors as shomusen, “war of attrition”, intended for police to extract a confession from the suspect.
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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.
Sources close to the matter reportedly said that the new warrant will be issued on Friday. 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 by Karpeles, suspecting it was intended for personal use. Karpeles’ lawyer claims that the bed was intended for interior decoration at Karpeles’ guesthouse, to serve as a marketing tool to promote bitcoin use.
His lawyer further argued that “it’s too much of a stretch to call this embezzlement,” adding that “despite the long detention period, the fact that investigative authorities could only come up with these reasons to make their case for embezzlement is evidence that Mark was not involved for personal reasons in the disappearance of massive cash and bitcoins.”