TOKYO - Japanese prosecutors said Friday that they have charged the head of collapsed Bitcoin exchange MtGox with embezzlement, amid fraud allegations over the disappearance of hundreds-of-millions-of-dollars-worth of the virtual currency.
The indictment of France-born Mark Karpeles, 30, comes after he was taken into police custody in Tokyo last month over the affair.
The charges are tied to allegations that Karpeles falsified data while another relates to claims he pocketed millions of dollars of Bitcoin deposits.
He has been held without formal charge for six weeks, as allowed under Japanese law.
Karpeles was first taken into custody over claims he fraudulently tinkered with data and transferred funds to other firms controlled by him dozens of times between 2011 and 2013.
He was later rearrested for allegedly pocketing about 321 million yen ($2.7 million) worth of Bitcoin deposits, extending an initial three-week incarceration during which time police likely grilled him over the incident.
Bitcoins are generated by complex chains of interactions among a huge network of computers around the planet, and are not backed by any government or central bank, unlike traditional currencies.
Tokyo-based MtGox shuttered last year after admitting 850,000 coins - worth around $480 million at the time, or $387 million at current exchange rates - had disappeared from its digital vaults.
The exchange, which once said it handled around 80 per cent of global Bitcoin transactions, filed for bankruptcy protection soon after the cyber-money went missing, leaving a trail of angry investors calling for answers.
The company initially said there was a bug in the software underpinning Bitcoins that allowed hackers to pilfer them.
Karpeles later claimed he had found some 200,000 of the lost coins in a "cold wallet" - a storage device, such as a memory stick, that is not connected to other computers.
But the whereabouts of the money and Karpeles' involvement appear far from solved.
The case presented a complex challenge to Japanese police, as financial watchdogs around the world struggle to work out how to regulate digital money, which started to appear around 2009.
Investors have called on the firm's court-appointed administrators to publicise its data so that experts around the world can help analyse what happened at MtGox.
In a recent interview with Japan's top-selling Yomiuri newspaper, Karpeles' mother said her "genius" son learned computer languages at age three and started making simple programmes of his own two years later.
In 2006, Karpeles - who reportedly lived in an $11,000-a-month Tokyo penthouse - wrote on his blog that computer crime was "totally contrary to my ethical principles".
But four years later, a Paris court sentenced him in absentia to a year in prison for hacking. He had come to Japan to work for a web development company in 2009 and later got involved with the Bitcoin exchange.
Backers say virtual currencies provide an efficient and anonymous way to store and transfer funds online. But critics argue the lack of legal framework governing the currency, the opaque way it is traded and its volatility make it dangerous.
Bitcoin's reputation was also damaged when US authorities seized funds as part of an investigation into the online black market Silk Road.