At least 6,000 Japanese citizens are the recent victims of a cryptocurrency pyramid scheme that saw them lose 7.8 billion yen which is 68.42 million dollars. The 6,000 victims come from 44 prefectures in Japan, and each contributed different sums of money. The scheme was operational from February to May 2017.
The pyramid scheme was made up of 8 people who are already in police custody. Among those arrested is 46-year-old Kazunari Shibata a company executive from Minato Ward. The eight ran a US investment company dubbed Sener as their investment vehicle. To make their company look legit, Shibata and his counterpart’s organized seminars with foreign speakers. They promised investors 3-20 percent returns on a monthly basis depending on their initial investment. In addition to the monthly returns, the suspects urged the initial investors to refer more people and get commissions. At least one video of the seminar was uploaded on YouTube.
Besides the above, Shibata and his friends also received $260,000 which is 29 million yen from nine people. The funds were to buy Bitcoin on behalf of the nine people. According to local authorities, the culprits walked away with 500 million yen which is 4.4 million USD from the victims.
In the court, the eight have to face charges from a lawsuit filed by 73 people who were among the investors fleeced. The 73 are seeking 370 million yen which is 3.26 million USD in total as damages. The case was filed in the Tokyo District Court. On the other hand, the eight will face charges for running a financial business without legal papers.
Furthermore, authorities are convinced the group was using cryptocurrency to get around the Japanese financial regulations to avoid been caught. In Japan financial business are under the FSA, but when it comes to virtual currency, there are loopholes which don’t cover the virtual currency sector fully. But for them, they violated the Financial Instruments and Exchange Law for not registering their business. For that, they have to answers to charges in court.
Although the FSA mandate is to issue licenses to exchanges in operation within Japan borders, they aren’t the one who monitors the crypto industry. The monitoring responsibility falls under the Japanese Virtual Currency Exchange Association (JVCEA).
From the eight arrested six including Shibata confessed to luring investors to their web to scam them, but two people denied charges of scamming investors.