Japanese police arrest 12 for Bitcoin (actually yen) fraud
April 18, 2018 by Jon Southurst
Police in Japan’s Tokyo and Hyogo prefectures arrested 12 people in July last year for suspected bitcoin trading fraud. Although touted in the media as a “bitcoin scam,” the real crime involves the use of JPY 200 million ($ 1.86 million) in counterfeit national currencies.
See also: NY Attorney General opens investigation into 13 crypto exchanges
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Fiat currency is rife with fraud
According to local news site Tokyo Reporter, the incident last year involved a $ 190 million in-person Bitcoin trade.
The alleged ringleader Kenta Higashi (24) from Kobe, a fresh produce worker, is said to have initiated the deal by offering the money to a company director in exchange for Bitcoin. An executive agent met the suspects in a hotel lounge in Shibuya, took the cash and arranged for the coins to be transferred.
It was later found that much of the cash was counterfeit. The 12 suspects all plead not guilty – however, Japan has a 99 percent conviction rate in criminal cases that reach a court.
The case points to more risks associated with the use of national fiat currencies as they are obviously easy to forge and reproduce. Aside from the cost of unwittingly receiving counterfeit money, the counterfeit detection business alone is valued at $ 3.11 billion by 2020.
Today’s arrests reflect another incident at a Tokyo hotel in November 2017 when four young men tried to rob an agent of a Bitcoin company at the knife point in Akasaka. In this case, the victim escaped with both his life and bitcoins, and the perpetrators were later arrested.
Why Do People Make Risky Cash Crypto Trades?
Trading in Bitcoin (and other cryptocurrencies) in such significant quantities often takes place over the counter or over the counter (OTC). This serves several purposes depending on the situation: It avoids the usual exchange trading fee / commission and avoids a shift in the BTC market price.
OTC or in-person transactions also protect the participants’ privacy from other people and also from the authorities. In this case, the victim reportedly claimed to have consented to the trade in order to avoid fees. However, the $ 93,000 commission was likely a sweetener too.
In-person trading is likely to become increasingly common in Japan as regulations that appear superficially permissible for trading cryptocurrencies introduce a series of monitoring and reporting requirements.
The Japanese government is keen to eradicate theft and money laundering related to Bitcoin and cryptocurrencies, while the country’s tax authority is also keen to get their hands on some of the monetary value generated by crypto trading and investments.
Would you trade Bitcoin OTC or in person? How much and what is safe? Let us know in the comments.
Images via Pixabay, Nagano Prefecture
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