The 32-year-old chief executive of defunct Mt. Gox pleaded not guilty on Tuesday to charges relating to the loss of hundreds of millions of dollars worth of bitcoins and cash from what was once the world's biggest bitcoin exchange.

French national Mark Karpeles filed the plea in response to charges of embezzlement and data manipulation at the Tokyo District Court, according to a pool report for foreign journalists.

The failure of Mt. Gox stunned the digital currency community. Critics said the debacle highlighted the risks of such transactions, while bitcoin proponents contended Mt. Gox was just an exception.

Karpeles said he had tried to save the exchange by using a kind of automated computer software called a "Willy bot," also described as an "obligation exchange," to help cover its rising debts by pushing bitcoin values higher.

"I am innocent of all the charges," he said. "I did not in any way dishonestly manipulate data or misuse the customers' money," he said.

The hunt begins

Mt. Gox which once handled 80 percent of the world's bitcoin trades shut down in February 2014, saying it had gone bankrupt after losing about 850,000 bitcoins - then worth around half a billion U.S. dollars - and $28 million in cash from its bank accounts.

Karpeles blamed hackers and was arrested in August 2015 and later released for transferring 341 million yen ($3 million, 2.6 million euros) from a Mt. Gox account holding customer funds to an account in his name.

The prosecution also alleged Karpeles boosted the balance of an account in his name in Mt. Gox's trading system.

If found guilty of embezzlement, he could face up to five years in prison or a fine. Yet people affected by Mt. Gox's failure are still trying to get back funds they lost and are hoping the trial will help explain what happened.

Unsurprisingly the case has posed a challenge for authorities unfamiliar with digital currencies and the technologies involved in their creation and trading.

In response this past April Japan became the first country to regulate exchanges at the national level. The government has also spelled out regulations to help prevent misuse of bitcoins and other virtual currencies for terrorism or other illegal activities, including requiring banks and other businesses to verify identities, keep records and report suspicious transactions.

The value of bitcoin is highly volatile: it hit a record high of $2,980 last month.

tr/nd (AP, Reuters)