The former head of defunct bitcoin exchange Mt Gox, Mark Karpelès, has been charged with embezzlement by Japanese prosecutors, according to reports from the Japanese media.

Karpelès is alleged to have embezzled ¥321m (£1.7m) from the bitcoin exchange, which collapsed in 2014 after revelations of a massive shortfall in customer funds.

He is alleged to have transferred money from Gox’s bank account to other accounts in October 2013, where it was mainly spent on buying licenses for 3D-rendering software, according to Jiji Press. Some of the money was also allegedly used on an “expensive custom-built bed”, Jiji added.

Karpelès was arrested in August in connection with the loss of hundreds of millions of pounds worth of bitcoin when the exchange collapsed.

At the time, a spokesman for the Tokyo police said French-born Karpelès, 30, was suspected of accessing the exchange’s computer system in February 2013 and inflating his cash account by $1m.

He has denied the charges, saying he had intended to pay back the money, according to the Yomiuri Shimbun newspaper.

In January this year, Yomiuri said that, contrary to reports from Mt Gox, the vast majority of missing bitcoins from the company’s stash were stolen by an insider, with just 7000 bitcoins, or 1% of the shortfall, attributable to hacking attacks from outside the company.