A spokesman for the Tokyo Police said France-born Karpeles, 30, was suspected of manipulating data on the exchange's computer system in 2013 to falsely create about USD 1.0 million.
Earlier today, Kyodo News and other Japanese media said police were also investigating his possible involvement in the 2014 disappearance of nearly USD 390 million worth of the virtual currency, at current exchange rates.
It was not immediately clear if there would be more charges against Karpeles, who reportedly denied the allegations.
Today, local media, citing police, said investigators suspect Karpeles knew details about the missing Bitcoins which were reportedly transferred to an account controlled by him -- without notifying depositors.
The top-selling Yomiuri newspaper also said police suspect that Karpeles repeatedly transferred clients' Bitcoins into his own account for speculative trading.
The exchange -- which once boasted of handling around 80 per cent of global Bitcoin transactions -- filed for bankruptcy protection soon after the cyber-money went missing, admitting it had lost 850,000 coins worth 48 billion yen (USD 387 million). They were worth about USD 480 million at the time of the disappearance.
Bitcoins are generated by complex chains of interactions among a huge network of computers around the planet and are not backed by any government or central bank.
A cloud has been hanging over the Tokyo-based exchange and Karpeles as investors demanded answers, and called on the firm to publicise its data so that hackers around the world can help analyse what happened at MtGox.
"They say it's under investigation. That's all they say," a French investor told AFP last year at a creditors' meeting in Tokyo.