Mark Karpeles, head of the failed Mt. Gox bitcoin exchange, was arrested Saturday in Japan on suspicion of artificially manipulating the exchange and losing a "massive amount" of the cryptocurrency.
French-born Karpeles, 30, was suspected of falsifying data on the exchange's computer system in 2013 to artificially create about $1 million and change the outstanding balance, according to a spokesman for the Tokyo Police, Agence France-Presse reported.
Police are also investigating Karpeles' involvement in the 2014 disappearance of nearly $500 million in bitcoin, which is worth $390 million at current exchange rates, according to Gizmodo.
Karpeles sent a statement to The Wall Street Journal a day before his arrest, describing the allegations as "false" and saying he planned to deny them, reports CNN.
He has not been formally charged, and Japanese authorities can detain him for up to 23 days before filing charges.
If found guilty, Karpeles could face up to five years in prison or a fine of up to 500,000 yen ($4,000), according to Time.
The global virtual currency and its community took a massive hit with the shuttering of Mt. Gox last year. The company, which once boasted of handling 80 percent of all bitcoin transactions, froze withdrawals in early 2014 over what was said to be a bug in the software. Karpeles said that 850,000 Bitcoins worth about $477 million at the time were missing and likely stolen by hackers, reports Tech Crunch.
In March 2014, a month after filing for bankruptcy, Karpeles announced that he found about 200,000 of the lost bitcoins in an old digital wallet on a "cold storage" device that was not connected to other computers.
