Japan’s National Police Agency has announced the arrest of 18 individuals, including the suspected leader, Yuta Kobayashi, in connection with a scam involving Monero (XMR) transactions. According to local media outlet Nikkei, the arrests were made following an investigation into approximately 900 fraudulent Monero transactions, which caused financial damage of over 100 million yen ($667,216).
Monero, known for its privacy and anonymity features, has attracted the attention of malicious actors seeking to exploit its security. This has also led to increased scrutiny from regulators, resulting in several exchanges, including Kraken and Binance, delisting Monero from their platforms.
The Japanese police have stated that this is the first known instance of using Monero’s blockchain data to track down and apprehend a criminal network. However, specific details about the analysis of the transactions were not disclosed, leaving room for speculation about the methods used.
This case follows a recent controversy involving blockchain analytics firm Chainalysis, which claimed that Monero transactions could be traced. This sparked backlash from Monero users. Additionally, Monero’s network developers detected and removed numerous malicious node IPs, possibly linked to Chainalysis, which could have been used to expose the IP addresses of users conducting Monero transactions.
This development aligns with the pro-crypto promises of Yuichiro Tamaki, leader of Japan’s Democratic Party for the People (DPP). Tamaki proposed reducing the tax on crypto gains to 20%, a significant drop from the current rates that classify crypto gains as miscellaneous income. This proposal is in line with Japan’s efforts to reassess crypto regulations and create a more favorable investment climate by lowering taxes on digital assets and reclassifying them.
In recent years, Japan has strengthened its digital asset sector by requiring crypto exchanges to obtain licenses, attracting major players like Binance and positioning itself as a growing hub for blockchain and crypto innovation.