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In August, an edition of Egyptian daily Ad-Dustur was seized after it said an unidentified "important Egyptian figure" was involved in the murder. The article alleged that a former Egyptian police officer as well as two hotel security officials had confessed to killing the singer for an Egyptian client.
Mohammed Sayed Said, editor of the independent Al-Badil newspaper, described the move by the often discredited Egyptian judiciary as "very smart" amid billowing rumors over Mustafa's relationship with the regime.
"I think at least it will mend fences and improve the credibility of the regime," Said said. "This shows the state is still keen to implement the law, but we have to see what will be the end result."
"There is still the suspicion that a court that may be inclined to declare him innocent can be used, which would be very damaging indeed," he said, pointing to the July aquittal of most suspects for a 2006 ferry sinking in which more than 1,000 people died.
Mustafa is the youngest son of the founder of the group of 30 companies, Talaat Mustafa, according to the company website. The company works in construction, property and luxury tourist developments as well as land reclamation and agriculture.
The younger Mustafa is described as an accountant by training with "an excellent mix between practical and academic experience." Shares in Talaat Mustafa Group, which were initially offered at 11 Egyptian pounds (around $2) in November, were down sharply in trading on Tuesday.