Japanese authorities dismantle Monero-linked scam in landmark investigation Japanese authorities dismantle Monero-linked scam in landmark investigation
The Japanese authority's claim has raised questions over Monero's anonymity promises.
2 min read
Updated: Oct. 21, 2024 at 3:11 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Japan’s National Police Agency announced that an investigation into Monero (XMR) transactions led to the arrest of 18 individuals involved in a scam, including the suspected ringleader, Yuta Kobayashi.
On Oct. 21, local media outlet Nikkei reported that the arrests followed the agency’s analysis of approximately 900 fraudulent Monero transactions, which reportedly caused over 100 million yen ($667,216) in financial damage.
Can Monero be traced?
Monero, a digital asset known for its strong privacy and anonymity features, has attracted the attention of malicious actors who attempt to exploit its security. This has also drawn the scrutiny of regulators, leading several exchanges, such as Kraken and Binance, to delist Monero from their platforms.
The Japanese police said this marks the first known instance of using Monero’s blockchain data to track down and apprehend a criminal network. However, the authorities did not disclose specific details beyond analyzing “flows” about how the transactions were analyzed, leaving room for speculation about the methods employed.
This case comes after a recent controversy involving blockchain analytics firm Chainalysis. The firm claimed that Monero transactions might be traceable, sparking backlash from Monero users.
Meanwhile, a post on Monero’s subreddit revealed that the network developers had detected and removed hundreds of malicious node IPs. These nodes, possibly linked to Chainalysis, might have been used to expose the IP addresses of users originating Monero transactions, though no direct confirmation has been made.
Japan’s pro-crypto moves
This development coincides with the pro-crypto promises of Yuichiro Tamaki, leader of Japan’s Democratic Party for the People (DPP).
In an Oct. 20 post on X (formerly Twitter), Tamaki proposed reducing the tax on crypto gains to 20%. This is a significant drop from current rates, which treat crypto gains as miscellaneous income.
A translated portion of his statement reads:
“If you think crypto assets should be taxed separately at 20% instead of treated as miscellaneous income, please vote for the Democratic Party for the People. There will be no tax when exchanging crypto assets with other crypto assets.”
This proposal aligns with Japan’s Financial Services Agency (FSA) efforts to reassess crypto regulations. The FSA is considering lowering taxes on digital assets and reclassifying them to create a more favorable investment climate.
In recent years, Japan has worked to strengthen its digital asset sector, requiring crypto exchanges to obtain licenses. This move has attracted significant interest from major players such as Binance, further positioning Japan as a growing hub for blockchain and crypto innovation
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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In this article
Monero is an open-source cryptocurrency that focuses on privacy, decentralization, and scalability..
Chainalysis
Chainalysis builds trust in blockchains between people, businesses and governments.
OKX
OKX is a world-leading digital asset exchange, providing advanced financial services to global traders by using blockchain technology.
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Kraken
Kraken is a San Francisco-based digital asset exchange in euro volume and liquidity that trades various currencies, including Canadian dollars, US dollars, British pounds, and Japanese yen.