Police in Tokyo has arrested eight men for their involvement in an alleged pyramid scheme involving cryptocurrency, according to Asahi Shimbun.
Returns of up to 20 percent
Six of the suspects have admitted to the crime. Allegedly, the defendants took both cryptocurrency and cash from the public, without registering for a licence with the relevant authorities.
They are accused of running a company called ‘Sener’, which they claimed was an American investment company, and soliciting money from nine victims. These victims paid the company a total of 29 million yen ($255,988), believing that the company would use it to buy Bitcoin on their behalf. In total, Sener took approximately 500 million yen ($4,413,588) from around 6,000 people nationwide in this way.
In cryptocurrency, they took much more – approximately 7.8 billion yen, of $68 million. According to the report, police say that the defendants used cryptocurrency to avoid being tracked.
Sener customers were promised monthly returns of up to 20 percent. In fact, like in other pyramid schemes, no money was invested. Money taken from customers was juggled around, and used to pay off other customers to avoid suspicion.
TrioMarkets Partners with HokoCloud, Expands its Portfolio with Social TradingGo to article >>
Japan and Crypto-Crime
Japan has seen its share of cryptocurrency crime.
In January, Tokyo-based exchange Coincheck was hacked, and hundreds of millions of dollars worth of cryptocurrency stolen. In July, a man was sentenced to a year in prison for infecting computers with cryptocurrency-mining software.
In addition to this, a spate of money laundering gangs using Monero, Dash, and Zcash to remain undetected led the Japanese cryptocurrency self-regulatory organisation to ban the use of these anonymity-focused coins in June.
Pyramid schemes in the cryptocurrency world have been very prevalent due to lack of regulatory oversight. One study found that fully half of Russian money invested in cryptocurrency over 2017 went to such scams.
In July 2018, a company called Team JUST set up a pyramid scheme and exit scam and openly advertised them as such, in the name of a psychological experiment. They made millions.