The Metropolitan Police Department cybercrime division and the Fukushima and Gunma prefectural police headquarters arrested a Chinese national (30), a company official who lives in Shinjuku Ward, Tokyo, for illegally opening an account on a cryptocurrency exchange using someone else’s personal information. The charge is the unauthorized creation and use of private electromagnetic records. This is the first time for the police to bust in Japan a suspect who unlawfully opened an account on a cryptocurrency exchange. The suspect denies the charge.
The allegation is that during the period from July 6 to 9, 2017, the suspect from China accessed the server of a cryptocurrency exchange operator in Tokyo and illegally opened an account by inputting another person’s private information.
According to the cybercrime division, the suspect sold the account to a Chinese criminal group for 6,000 yuan (about 100,000 yen).
Last July, the Chinese group illegally withdrew three million yen from an account under a corporate name at a credit union in Gunma Prefecture. After the withdrawal, the group exchanged the stolen money with “Bitcoin” cryptocurrency and transferred the currency to the account they bought from the suspect. The group apparently intended to use the account for money laundering.
The suspect runs an agency that handles the sale of cellular phones and other goods in Tokyo. He reportedly obtained for 30,000 yen personal information from a Vietnamese with whom he became acquainted through business. In February, the Vietnamese was arrested by the police on the charge of violating the Act on Prevention of Transfer of Criminal Proceeds.
The cybercrime division, suspecting that the arrested man was an “account provider” who illegally opens accounts for criminal groups, is continuing the investigation.
High anonymity, transnational criminal groups
This was the first time in Japan that the police made an arrest in a case of illegally opening an account for a cryptocurrency exchange. In the past, illegally opened bank accounts were mainly used in bank transfer scams, but the latest case reflects the recent popularity of cryptocurrency. The suspects in the case are all foreigners, which indicates the transnational nature of the criminal groups. Taking advantage of the high degree of anonymity cryptocurrency provides, more criminals are wrongfully using cryptocurrency. The police are on high alert.
Cryptocurrency transactions are quick and easy, and users and transfer records remain anonymous. Taking advantage of these characteristics of cryptocurrency, more criminals use illegally-opened cryptocurrency accounts for money laundering and illegal currency transfers through hacking.
One reason criminals wrongfully use cryptocurrency accounts is that they are more anonymous than bank accounts, which are used for bank transfer scams, making criminals less vulnerable to police detection.
In fact, there was an incident involving a cryptocurrency account in which a large amount of “NEM” cryptocurrency was stolen. Cryptocurrency was also used for drug trafficking and the payment of child pornography.
Criminal gangs are becoming more globalized. In the latest case, men involved in illegally opening the account were busted, but the group that unlawfully used the account for illegal money transfer is reportedly in China. If the group has already exchanged the illegally obtained cryptocurrency with another currency, it would be difficult to track down and catch its members.
In order to respond to such complicated situations, last April the government enforced the revised Act on Prevention of Transfer of Criminal Proceeds, which requires cryptocurrency exchange operators to report suspicious transactions. However, even after the enforcement of the revised law, cryptocurrency accounts have been wrongfully used. That means it will be difficult to take sweeping measures to eradicate similar cases.