Japanese police suspect Mt. Gox founder knew details of missing BTC

Mark Karpres, the founder and former CEO of Mt. Gox, the world's largest bitcoin trading platform, which has gone bankrupt, was arrested and interrogated in Japan recently on suspicion of manipulating the company's computer system to commit financial fraud and may be charged with making tens of millions of dollars in profits for his own accounts through fraud.

According to Kyodo News, Kapres was arrested by Japanese police on the 1st and began to be interrogated in a detention center on the 2nd. The Japan Broadcasting Association and the Yomiuri Shimbun reported that the Tokyo Metropolitan Police Department is interrogating Kapres about the misappropriation of about 1.1 billion yen (about 8.9 million US dollars) from user accounts. According to a source from the investigation on the 3rd, Kapres may have manipulated the system to increase the balance of tens of millions of dollars in his own cash account, far exceeding the 1 million US dollars on his arrest warrant.

According to sources, based on the server and other computer analysts, Japanese police believe that Kapres manipulated the computer system at least 30 times to increase the outstanding balance of cash and Bitcoin since opening the Mt. Gox trading platform in 2011. A person familiar with Kapres said that Kapres denied the previous accusation that he illegally increased the balance of his own account by a total of 1 million US dollars twice, saying that the cause of the incident was a hacker attack. But Kapres had told the person that he manipulated the test system many times, adding up to tens of thousands of yen to his own account each time, and conducted Bitcoin transactions with users after modifying the data.

Kyodo News quoted sources as saying that Karpeles's purchase of Bitcoin and filling of account balances may have contributed to the bankruptcy of Mt. Gox. However, both the Financial Times and the Wall Street Journal reported that it is not clear whether the charges against Karpeles are related to the Mt. Gox Bitcoin loss case.

Mt.Gox, headquartered in Tokyo, Japan, was once the world's largest Bitcoin trading platform. Earlier last year, Mt.Gox closed its website and claimed that it had lost 850,000 Bitcoins due to a hacker attack, including 750,000 Bitcoins from users and 100,000 Bitcoins in the platform's own reserves, with a total value of more than $500 million at the exchange rate at the time. Since then, Mt.Gox has recovered 200,000 Bitcoins in the old format of digital wallets, but the remaining 650,000 Bitcoins and about 2.8 billion yen in users' cash accounts are still missing. In March last year, Mt.Gox filed for bankruptcy protection in the United States under Chapter 15 of the U.S. Bankruptcy Code and initiated bankruptcy protection procedures in June.

As for the hundreds of thousands of bitcoins stolen after the website was hacked, Kapres still insisted that it was not his fault. However, industry experts have pointed out that the so-called "hacker intrusion" is completely fake. In fact, the bitcoins hosted on Mt. Gox have been disappearing since 2011; and the large-scale theft was not disclosed until February 2014.

Currently, Japanese police suspect that Capres actually knew the detailed information of the lost Bitcoins because these Bitcoins were transferred from his account to other separate accounts; this looks like a planned, premeditated and organized financial crime, not like the behavior of a hacker who broke into the Mt. Gox system.

It is reported that the Japanese police will interrogate Kapres for up to 20 days, after which they will choose to release him or formally charge him. The Financial Times reported that Kapres' lawyer said that Kapres would deny any criminal behavior, but did not respond to a request for comment.

According to AFP, Japanese police also said on the 3rd that they will promote coordination with the G7 to intensify joint supervision of virtual currencies. Japanese government spokesman Yoshihide Suga said at the regular media briefing that day that some information has been collected and virtual currency supervision measures have been discussed. The G7 summit to be held later will require each country to propose supervision measures to prevent terrorist financing and money laundering. (Reporter Liao Bingqing)