The head of the failed Japan-based bitcoin exchange Mt. Gox was arrested in Tokyo today on suspicion of inflating his cash account by $1 million. Mark Karpeles, 30, is suspected of accessing the exchange's computer system in February 2013 and swelling his account, Japanese police said. Mt. Gox went offline early last year. Karpeles said then that tens of thousands of bitcoins worth several hundred million dollars were unaccounted for, and suggested they were stolen by hacking. The relationship between the lost bitcoins and the inflated account was not immediately clear, and as the New York Times puts it, "The arrest, and the small amount of information divulged by Japanese law enforcement officials, shed little light on the larger mystery of the missing Bitcoins."
Japanese TV showed a T-shirt-clad Karpeles, with a baseball cap pulled low over his face, being led into a police car from his home in Tokyo. If found guilty, the France-born Karpeles could face up to five years in prison, or a fine of up to $4,000. Karpeles' lawyer said his client denies wrongdoing, the Kyodo News agency reported. Japanese authorities have acknowledged they were baffled by the Mt. Gox case because they had never dealt with possible crime dealing with bitcoin. Experts also said it might be difficult to take action because of the absence of laws over virtual currencies. (Read more Mark Karpeles stories.)