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August 3, 2015

CEO of failed MtGox bitcoin exchange arrested in Japan

He might have to serve up to five years in prison.

By CBR Staff Writer

Japanese authorities have arrested Mt. Gox CEO Mark Karpeles for the loss of bitcoins worth $387m last February, which boosted his cash account by $1m.

Last year, the company went offline after filing for bankruptcy as Karpeles suggested that thousands of bitcoins worth several hundred million dollars that were unaccounted for were actually stolen by hackers.

After filing for bankruptcy, in March 2014, MtGox said it had found 200,000 lost bitcoins.

However, the relationship between the lost bitcoins and inflated account was not immediately clear.

Authorities suspect that Karpeles accessed the exchange’s computer system in order to forge data on its outstanding balance.

However, Kyodo News agency reported Karpeles’ lawyer as saying that his client denies of any wrongdoing.

If found guilty, Karpeles might have to serve up to five years in prison and will have to pay a fine of up to 500,000 yen ($4,000).

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According to reports, the Japanese authorities are puzzled by the case because they never had to deal with a criminal case related to the virtual currency, and expect the decision to be difficult due to lack of proper regulation related to bitcoins.

None of the financial authorities or central banks regulates Bitcoins.

However, California and New York are working on legislation to regulate businesses that hold bitcoin and other virtual currency.

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