out eight were arrested in Tokyo for being involved in a cryptocurrency pyramid investment scheme. The net worth of the project was 7.8 billion Yen. The pyramid scheme gathered the money from 6000 unsuspecting people in the name of a fake US investment company called “Sener.”
To prevent people from suspecting them, they have organized seminars chaired by foreign speakers. The workshops were used to create public trust in their promise for a 3 to 20 percent return on their investments. The unsuspecting investors were asked to refer further people in the scheme, and they were promised extra returns for referrals in the form of payments for each reference. The videos of the seminars were uploaded on YouTube.
The Tokyo Metropolitan Police Department has to state that the accused were charged with running unregistered financial businesses without registering with the Financial Services Agency (FSA). The group tried to evade prosecution by executing the entire scheme by making use of digital currencies. Unregistered financial business is a grey zone per the Japanese Financial Regulation.
Cryptocurrencies which are not regulated under Financial Instruments and Exchange Law are gray areas. However, if they are regulated under special circumstances, they are legal.
A group lawsuit was filed by 73 victims affected by the pyramid scheme. They filed the allegations against the eight men in the Tokyo District Court. The victims sought $3.26 million that amounts to 370 million yen in damages. About 5 of the alleged men admit to the wrongdoing, while 3 of them are not accepting the allegation.
The alleged suspects have solicited money from men and women under the pyramid scheme. They collected a total of 29 million yen in cash from about nine people based on claims that they will be buying Bitcoins on their behalf.
The Tokyo police state that the fraudsters reportedly collected nearly 500 million yen in money from the victims.
While Japan continues to be crypto-friendly, the country has, however, due to the different attacks on the cryptocurrency firms are tightening the regulations, while still being friendly with legit cryptocurrency exchanges.
There have been several instances of crypto crimes in Japan with instances of hacks on several cryptocurrency exchanges like NEM currency, Ziaf etcetera.
The FSA is responsible for licensing cryptocurrency exchanges in the country. And, the financial regulator has provided the exchanges with the right to regulate themselves from October via the Japanese Virtual Currency Exchange Association. cryptocurrency fraud, scams, and hacks are the major reason that awakened the regulators towards the need to regulate the crypto market.