Police in Japan’s Tokyo and Hyogo prefectures have arrested 12 people over an alleged live bitcoin trade fraud in July last year. Though touted in the media as a “bitcoin fraud” incident, the actual crime concerns the use of ¥200 million JPY ($1.86 million USD) in counterfeit national currency bills.
Fiat Currency Use Rife With Fraud
Local news site Tokyo Reporter said last year’s incident involved an in-person trade for ¥190 million JPY in bitcoin for ¥200 million, giving the BTC seller a roughly $93,000 USD commission.
Alleged ringleader Kenta Higashi (24) of Kobe, a fresh produce worker, reportedly initiated the deal by offering a company executive the money in exchange for bitcoin. An agent of the executive met the suspects in a Shibuya hotel lounge, received the cash and initiated a transfer of the coins.
A majority of the cash provided was later discovered to be counterfeit. The 12 suspects are all pleading not guilty — however Japan infamously has a 99 percent conviction rate in criminal cases that reach a court.
The case highlights more risks surrounding the use of national fiat currencies, given the apparent ease with which they can be counterfeited and reproduced. Leaving aside the costs of unknowingly receiving counterfeit money, the business of detecting it alone is estimated to be worth $3.11 billion USD by 2020.
Today’s arrests echo another hotel-based incident in Tokyo in November 2017, when four young men attempted to rob a bitcoin company agent at knifepoint in Akasaka. In that case the victim escaped with both his life and his bitcoins, and the perpetrators were later arrested.
Why Are People Making Risky Cash-Crypto Trades?
Bitcoin (and other cryptocurrency) trades of such substantial amounts often take place off-exchange, or “over-the-counter” (OTC). This serves a number of purposes depending on the situation: it avoids the usual exchange trading fee/commission, and avoids moving the BTC market price.
OTC or in-person trades also protect the privacy of participants from other people and also the authorities. In this case, the victim reportedly claimed to have agreed to the trade to avoid fees. However the $93K commission was also likely a sweetener.
In-person trades are likely becoming more common in Japan as regulations, while on the surface appear permissive to cryptocurrency trading, introduce a raft of monitoring and reporting conditions.
The Japanese national government is keen to stamp out theft and money laundering involving bitcoin and cryptocurrency, while the country’s tax agency is also interested in getting its hands on some of the monetary value crypto trading and investing has produced.
Would you trade bitcoin OTC or in-person? How much, and what is safe? Let us know in the comments.
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