Eight Arrested in Japan on Suspicion of Running Multi-million-dollar Crypto Pyramid SchemesteemCreated with Sketch.

in tekyboy •  last month

Japan is the latest country to be hit with a cryptocurrency pyramid scheme. This one spans across 44 prefectures in the country, involves approximately 6,000 victims and has raised almost $70 million.


Ponzi and pyramid schemes definitely appear to be the scams of choice for crypto fraudsters out there. We’ve reported on alleged cases happening all over the world, including in India and Poland. Now, it seems as if its Japan’s turn. According to The Asahi Shimbun, this latest case involves over 6,000 victims and is worth nearly $70 million.

Tokyo’s Metropolitan Police Department arrested eight people on suspicion of violating the Financial Instruments and Exchange Law as they did not register their business with the required authorities.

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ROIs That are Too Good to be True

It is alleged that the accused hosted events and seminars where they enticed potential investors to part with their cash and crypto promising impressive returns of between 3 and 20% depending on how much they contribute. Perhaps in a bid to lend an air of legitimacy, these seminars also had foreign speakers. However, a potential warning sign was that these events also requested that attendees bring in more investors if they would like to see their contribution grow even more.

The alleged scammers requested that investments be made in Bitcoin and any cash contributions would, apparently, be used to buy bitcoins. Nine such victims gave a combined total of 29 million yen in cash last year, which equates to just under $260,000. They were told they were contributing to a U.S. investment firm.

Last month saw 73 victims file a lawsuit against the suspected fraudsters and are requesting 370 million yen, which is over $3 million, in restitution. However, investigators believe that there are, in fact, 6,000 victims located all over Japan. It is estimated that the alleged scheme raised 500 million yen in cash alone. This is nearly $4.5 million. The rest of their ill-gotten gains were received in crypto.

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Japan and Crypto Regulations

Because of this crypto component, the suspects flew under the radar of the Financial Instruments and Exchange Law as virtual currencies are not recognized as securities under its legislation. It is not clear when the alleged fraudsters will have their day in court.

Live Bitcoin News previously reported that Japan’s Financial Services Agency (FSA) has given the cryptocurrency industry self-regulatory status in the country, giving the Japan Virtual Currency Exchange Association authority when it comes to any industry violations.

Do you think that the eight accused will be harshly punished? How will Japan’s new view on crypto regulation impact the future of crypto fraud in the country? Let us know in the comments below!


Images courtesy of Shutterstock

Tags: fraud, FSA, Japan, pyramid scam, ROI, Yen
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