Recently, Japanese police arrested Mark Karpeles on the suspicion Karpeles falsified computer data regarding the outstanding balance of MtGox.

MtGox, headed by Karpeles, was the first and largest Bitcoin exchange prior to its shut down. The exchange, which was first intended to be Magic: the Gathering Online Exchange (MtGOX), accounted for 80% of all Bitcoin transactions prior to folding in February of 2014.

The exchange shut down after allegedly losing 850,000 Bitcoins, worth $387 million at the time. One month after shutting down, Karpeles announced that he had found 200,000 of the missing coins in a cold wallet, bringing the total missing down to 650,000.

MtGox played a huge role in the Bitcoin ecosystem, and the shutdown had huge consequences. The price of Bitcoin dropped 25%, around $200 per, February 2014, which was caused primarily due to MtGox closing its doors.

Not much information was released regarding how the coins were lost. MtGox has been hacked in the past, and due to its relatively poor security, many people originally believed the site was hacked. However, popular speculation today suggests that the coins were actually gambled away – that Karpeles wagered exchange balances on the price of BTC, and lost.

In response to the arrest, a former employee and ex-CEO of the exchange in 2011 shared a lot of shocking information regarding the business in an Ask Me Anything Reddit thread. In response to a question asking what took place during the former employee’s time at MtGox, this answer was given:

A lot of ridiculousness, and a lot of nothing. I hired the initial employees, Mark hired some devs (his friends) and not a whole lot was accomplished during my time there. … I recall the dev’s (and Mark) playing Oblivion, super meat boy and other games while shit was hitting the fan. I don’t blame the dev’s, they had no access, not even a pre-production server to help Mark with the exchange. … All in all, I felt Mt.Gox was an RPG to Mark, as he didn’t quite grasp the reality that the money being in deposited into his bank account meant more to other people than just numbers on his screen.

This is not Karpeles’ first legal troubles. During his teens, Karpeles was wanted by France for credit card fraud, and fled to Israel.