Cyprus's police were on the verge of issuing either a European or an international warrant on Thursday for the arrest of the founder of the first bitcoin exchange on the crisis stricken island on charges of forgery and defrauding.

A bid to start the virtual currency exchange fell on its face barely a month after the Neo & Bee bitcoin vendors business was launched with a grand opening of its Nicosia flagship office.

The company halted operations in late March before its transaction software had become operational.

Neo & Bee CEO Danny Brewster skipped Cyprus at the end of March and subsequently complaints of fraud against him were filed with the police.

"We have three complaints for a total sum of 80,000 to 90, 000 euros. Investigators are probing a case against Brewster involving issuing and using forged documents and appropriating money," spokesman at Police Headquarters Andreas Angelides told Xinhua.

He said investigators will apply for either an international or a European arrest warrant for Brewster to be sent back to Cyprus.

"The type of arrest warrant will depend on where investigators establish Brewster currently is," said Angelides.

Brewster made an appearance in a bitcoin forum early in April denying any wrongdoing. He claimed that he had gone abroad to raise capital through the selling of his equity or through investors as the business had run out of liquidity.

In his latest post three days ago Brewster claimed that he had converted many of his bitcoins to euros when the Silk Road internet money laundering and narcotics operation was busted in early October 2013 to avoid the risk of his virtual currency becoming worthless.

He did not explain why this would happen.

Brewster denied that he had misappropriated money in Cyprus despite the fraud complaints to the police and reports that he had left behind debts of about 1 million euros stemming from a high profile marketing campaign, renting office space and buying furniture and hiring a staff of nearly 20.

Staff members did not receive their wages for March and have resigned.

Brewster's protestations of innocence are not taken into account by Cypriot police.

"If he returns to Cyprus the arrest warrant against him will be executed and it would then be up to the courts to decide," the police spokesman said.

First mention of setting up a bitcoin market in Cyprus was made shortly after the meltdown of the Cypriot banking system in March 2013, when the Eurogroup decided to recapitalize the island's largest lender with depositors' money and to wind down of a second bank, as part of a 10-billion euro bailout.

The announcement was about opening both an exchange center and establishing the first bitcoin vending machines worldwide with the aim of capitalizing on the public's distrust of the banks.

After the Neo & Bee opening was announced, the government and the Central Bank of Cyprus warned on March 16 prospective clients to be wary of investing in bitcoins.

They pointed out in a statement that the virtual currency market was completely unregulated, bitcoin exchanges could collapse, "digital wallets" could be physically damaged or cracked by hackers, the value of the virtual currency could fluctuate in an arbitrary way and transactions in virtual currencies entailed the risk of criminal activities, including money laundering.