Disgraced former Mt Gox Chief Executive Officer Mark Karpeles was rearrested on fresh charges in Japan Wednesday with reports that that at least some of the stolen Bitcoin from the exchange was spent on hiring prostitutes.

Karpeles had been previously arrested by the Tokyo Metropolitan Police Department in July on charges of “fraudulently producing and using private electromagnetic records,” specifically that he had fraudulently manipulated Mt Gox’s cryptocurrency system and inflated the Bitcoin balance in bogus accounts, and then later arrested again in August on embezzlement charges, specifically that he misappropriated $2.6 million of deposits from the trading accounts of Mt Gox customers.

According to The Japan Times the new charge relates to Karpeles moving ¥20 million ($166,000) in client money to his bank account, with at least some of this money being spent on “an unspecified sum on prostitutes” that involved “several women whom he met at venues that offer sexual services.”

Under Japanese law a suspect, once arrested, can only be held for up to three weeks without formal charges being laid, and a suspect must be rearrested if new charges are being considered, hence the requirement for Karpeles to be rearrested on the new accusation.

Still missing millions

Sadly with the latest charges, Japanese police seem to be no closer to discovering the whereabouts of the some 650,000 missing Bitcoins that disappeared with the collapse of Mt Gox, although each charge brings new hope that as the investigation continues, more findings of impropriety in relation to Karpeles may eventually lead to discovering the lost millions.

Karpeles for his part still denies all accusations against him and claims that Mt Gox was hacked, but as we’ve written before, the evidence posts towards the theft of $380 million odd in Bitcoin being an inside job, whether it was Karpeles himself or another employee.

The good news is that Karpeles has already been formally charged on the first allegation of embezzlement, and given Japan is said to have a high rate of court convictions, one way or the other he is going to jail, it’s just a question now on how many charges and for how long.

It may only be small solace to those who lost money in the Mt Gox collapse, but it’s better than Karpeles getting away with his crimes without jail time.

Image credit: blemishedparadise/Flickr/CC by 2.0