TOKYO, July 11 (Reuters) - The CEO 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, the Nikkei business daily reported.
Mark Karpeles, a 32-year-old French national, filed the plea in response to charges of embezzlement and data manipulation at the Tokyo District Court, the Nikkei said.
Prosecutors said Karpeles sent around 340 million yen ($3 million) from an account that managed customers' funds to an external account between September and December 2013, and increased the balance of the account via "improper operation" of Mt. Gox's trading system, the Nikkei reported.
Karpeles' defence told the court he had remitted the firm's revenue, not customer funds, and that the increased balance was part of the administrative process of exchanging cash and bitcoins and therefore not illegal, according to the Nikkei.
Mt. Gox once handled 80 percent of the world's bitcoin trades but filed for bankruptcy in 2014 after losing some 850,000 bitcoins - then worth around half a billion U.S. dollars - and $28 million in cash from its Japanese bank accounts.
In its bankruptcy filing, Tokyo-based Mt. Gox blamed hackers for the lost bitcoins, pointing to a software security flaw.
Mt. Gox subsequently said it had found 200,000 of the missing bitcoins.
The collapse of Mt. Gox represented a major setback for bitcoin and badly damaged the image of virtual currencies, particularly among risk-averse Japanese investors and corporations.
But the bankruptcy also prompted Japan's government to decide how to treat bitcoin, and preceded a push by local regulators to licence virtual currency exchanges.
Japan this year became the first country to regulate exchanges at the national level, part of a government effort to exploit financial technology as a means of stimulating the economy.
Interest in bitcoin among Japan's legions of individual investors - encouraged by Tokyo's recognition of the virtual currency as legal tender - has spiked in recent months.
Still, institutional investors remain wary, say those running virtual currency exchanges in Tokyo. Japanese firms are also unenthusiastic: Only 4 percent of large and mid-sized firms plan to use bitcoin, showed a Reuters poll last month.
The value of bitcoin is highly volatile. It hit a record high of $2,980 last month. ($1 = 114.1900 yen) (Reporting by Thomas Wilson; Editing by Christopher Cushing)