The former CEO of the world's largest Bitcoin exchange was finally arrested by the law

Japanese media reported that Mark Karpeles, head of the now-defunct MtGox bitcoin exchange, has been arrested in Tokyo and faces new charges of misusing $890 million in customer deposits.

Karpeles, 30, a Frenchman, was arrested and jailed on Saturday on a string of fraud charges that contributed to last year's stunning collapse of a Tokyo exchange and dealt a heavy blow to the reputation of virtual currencies.

Karpeles is suspected of manipulating the exchange's computer system data in 2013 to forge about $100 million worth of bitcoins. Police are also investigating whether he was involved in a massive loss of virtual currency in 2014.

NHK television reported that he was taken to the Tokyo District Public Prosecutors Office in the early morning of August 2 for further investigation.

Police now suspect Karpeles used customer deposits worth about 11 billion yen ($890 million), according to NHK television and the top-selling Yomiuri Shimbun newspaper.

The news report said police believed he had misused the funds privately and transferred them to his other companies.

Police are expected to arrest Karpeles a second time on charges of professional misappropriation of funds rather than misuse of funds.

In Japan's criminal justice system, police can hold suspects for up to three weeks without a conviction, during which time they can conduct intensive interrogations and extract confessions.

Karpeles has denied all charges and his lawyer had no immediate comment.

Before Karpeles was arrested, he told the Nikkei business daily that he had never misused client funds and that he still suspected hackers had been stealing bitcoins for years.

The global virtual currency community was affected by the closure of MtGox, which froze withdrawals in early 2014 after the company said a bug in its software system that underpins bitcoin could allow hackers to steal deposits.

MtGox, the bitcoin exchange that once boasted it handled 80 percent of the world's bitcoin transactions, filed for bankruptcy protection soon after the electronic currency disappeared, admitting it had lost 850,000 bitcoins worth 48 billion yen ($3.87 million) or $480 million at the time of the disappearance.

Karpeles then said he had found some of the missing bitcoins, about 200,000, in a "cold wallet," a storage device like a memory stick that is not connected to a computer.

Japanese media reported that the police investigation said that investigators suspected that Karpeles knew some details about the missing bitcoins without informing the depositors, and he may have transferred the information to a separate account through his exchange center.

Bitcoin is created by the interaction of a complex chain of computers in a vast internet network around the world and is not backed by any government or central bank, unlike traditional currencies.

Investors have begun demanding answers from Karpeles and asking the company’s court-appointed administrator to release its data so that hackers around the world can help analyze what happened at MtGox.

"I knew it. I just thought it was strange that all the bitcoins could just disappear because of a hack," said Mainichi Shimbun, a 23-year-old investor who saved his bitcoins from the MtGox crisis.