Japanese police officers have arrested a teenage high schooler on suspicions of operating an illegal Litecoin (LTC) exchange.
According to local media, Tokyo Metropolitan Police Department’s Cyber Crime Control Division charged a male aged 18 with violating the Payment Services Act on March 4.
The police officers said the unnamed teenager is a third-year high school student who lives in Miyakonojo, a city in Miyazaki Prefecture.
The teenager, police said, earned around $20,000 in fees from trades conducted on his platform.
Police said they had sent the teenager’s case to prosecutors, and believe he ran a crypto trading platform.
They think the high schooler bought and sold LTC coins to other pupils and older adults alike.
Officers said at least 30 customers had already been identified – 20 of whom are “teenagers.”
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Japan: Strict Regulation in Force
The teenaged suspect faces charges of operating a “virtual currency exchange business without registration.”
Japanese crypto exchange operators must obtain permits from the regulatory Financial Services Agency (FSA).
This is a long and complicated process that only a handful of heavily backed firms and IT startups have managed to complete.
As such, officers think illegal exchanges are now operating online, using social media networks as advertising channels.
Police said the male student “solicited customers on Twitter [X]” and “repeatedly bought and sold Litecoin tokens.”
Crypto Exchange Operator Traded LTC With Other Teenagers, Say Police
Officers said the teenager was active on his platform “between July and September 2023.”
They also said that, among others, transactions included a PayPay payment of approximately $400 to “two teenage high school students” to buy Litecoin.
In August of the same year, police said the suspect received about $166 from “a female office worker in her 40s” in exchange for LTC coins.
The woman confessed that she had used the teenager’s platform, and told police officers:
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“I wanted to play at an online casino where you can use cryptoassets as stake money.”
The Cyber Crime Control Division said the teenager “solicited customers by charging lower exchange fees than other unregistered platforms.”
Some of the teenager’s younger customers also reportedly confessed they had bought coins to play in online casinos.
Japanese police appear to have their work cut out for them in the battle against teenage crypto trading. The newspaper Mainichi wrote:
“The buying and selling of virtual currencies without registration appears to be widespread on online social networking services. The Tokyo Metropolitan Police Department is stepping up its investigations on the suspicion that young people may be involved.”
In 2022, police in Gunma Prefecture arrested an 18-year-old man on suspicion of trying to cheat a man almost three times his age out of over $17,000 as part of a crypto fraud scheme.
Two pieces of legislation, the 2017 Payment Services Act and a 2020 amendment to the same act, currently govern the crypto exchange industry in Japan.
These require platform operators to submit reports to the FSA.
They must also follow Financial Action Task Force (FATF) guidelines, and adhere to comprehensive Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) protocols.
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