Japanese authorities arrest 8 for involvement in $68 million Ponzi scheme

November 17, 2018
Kane Pepi


Japanese authorities arrest 8 for involvement in $68 million Ponzi scheme

If there is one thing that the cryptocurrency markets could do without, it’s yet another large scale digital heist. As per a recent report by Japanese publication Asahi Shimbun, eight individuals have just been arrested by Tokyo Police for their involvement in a $68 million cryptocurrency scam.

The publication indicates that those arrested were claiming to be involved in a U.S.-based investment firm called “Sener.” Through a range of public seminars, meetings and ongoing discussions, the suspects are believed to have promised unsuspecting investors monthly returns of between 3 and 20 percent. Moreover, as with most Ponzi Schemes, including the infamous case of BitConnect, users were promised additional rewards for inviting new members to the investment project.

Unlike traditional Ponzi schemes, the preferred currency of choice from the criminals was Bitcoin. The report states that Sener was able to dupe more than 6,000 victims into the scheme, who subsequently parted with more $68 million. Large value cryptocurrency investments are not unusual in Japan, as regulators treat Bitcoin and other leading coins in the same light as the Yen. As a result, more than 200,000 Japanese stores now accept Bitcoin, making it one of the most crypto-friendly jurisdictions in the world.

However, there is a somewhat “grey area” when it comes to investing in crypto-based projects that resemble that of a traditional financial security. The reason for this is that although cryptocurrencies are clasified as “currencies,” they do not fall within the scope of “securities.” As a result, start-ups are able to circumvent much of the regulatory red-tape that is often seen in conventional investment spaces.

Out of the 6,000 individuals that fell victim to the scam, 73 have proceeded to take legal action against the criminals, with the lawsuit seeking $3.2 million in damages. Asahi Shimbun, the Japanese newspaper that broke the story, claim that six of the alleged suspects have already admitted the charges brought to them.

This isn’t the first time that the nation of Japan has played host to a cryptocurrency scandal of significant scale. Although it was originally the fall of M.T. Gox that forced Japanese authorities to regulate the industry in the same way it does its financial services sector, this hasn’t demotivated criminals to target those operating from within the nation.

Earlier in January of this year, Coincheck, a third party exchange incorporated in Japan, had more than $517 million worth of cryptocurrency stolen from their internal wallets. And then as recently as September 2018, Japanese-based exchange Zaif was the victim of a remote hack, resulting in the theft of more than $59 million worth of cryptocurrency.