33 Cases: Cryptocurrency Fraud Is on the Rise in Japan

Nikhilesh De
Sep 8, 2017 at 12:00 UTC
NEWS

Japanese consumers reported 33 cases of cryptocurrency-related fraud in the first seven months of 2017, representing more than half a million dollars-worth of losses.

According to reports from Nikkei and The Yomiuri Shimbun, the National Policy Agency (NPA) reported roughly ¥76.5 million ($710,848) in fraud-related thefts between January and July. The pace of those complaints appears to have picked up as the year progressed – corresponding to the rising cryptocurrency market – with ¥17.3 million reported stolen in July alone.

The cases involved cryptocurrencies like bitcoin, ether and Ripple's XRP, the reports said, with the majority of the year's reports thus far relating to thefts of bitcoin.

According to The Mainichi, another Japanese newspaper:

"Damages by virtual currency up to June 2017 were the most for Ripple, at 29.6 million yen, followed by bitcoin at nearly 29.3 million yen. Damages in other currencies ethereum and NEM amounted to 200,000 yen and 100,000 yen, respectively, among others."

The article notes that while many of the victims' accounts did not have two-factor authentication implemented, at least three accounts did. Two-factor authentication provides an extra layer of security to digital accounts, and requires a digital token to be able to log into an account.

The NPA did not reveal how the cryptocurrency thieves bypassed two-factor authentication to transfer the funds. And to date, none of the funds identified have been recovered. According to The Mainichi, the police agency said the stolen funds may have already been converted to other forms of money, including cash.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Ripple.

Japanese police image via cowardlion/Shutterstock

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