Chinese Investors caught in a Tokyo real estate company saga

Chinese investors

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TL;DR Breakdown

  • Tokyo tax regulators catch up on three Chinese investors involved in an underground cash injection into a Japanese real estate company.
  • The regulators find it crucial to work with Chinese authorities to uncover illegal money injection to Japanese businesses.

Three Chinese investors were caught by the Tokyo Regional Taxation Bureau injecting money in cryptocurrencies in a Japanese-based real estate company. According to the tax regulators, the Chinese investors chose to evade regulations, investing approximately $237 million into the company. 

The ongoings circulated the Taito region, facilitating vast amounts of money as the taxation authority discovered. However, it sticks to the fact that following the crypto transfers exchanged into Yen. As per its report, the three individuals leveraged a crypto exchange for performing their shenanigans for over three years. 

China is known for its stringent crypto regulations, recently banning all crypto activity, including mining. Furthermore, it is reluctant to allow its citizens to invest in offshore businesses, resulting in similar situations.

However, the Tokyo tax regulators believe that with the help of the Chinese, they can avoid illegal injections of money into their businesses. Nonetheless, it is still unknown if China will agree to this suggestion.

The Chinese investors’ proceedings

As per the audits by the Tokyo tax regulators, the company amassed over 10 billion yen in income every year. Additionally, the three Chinese investors went on with the same for three years, allowing the Japanese company to take part of the profits as a commission for its services. The business involved a photo studio targeting tourists coming into Japan. 

Most of the communication between the Chinese investors and the Tokyo company happened on WeChat. The investors collaborated with others in China who wished to enter the Japanese business space. Considering the regulations set by the Chinese government, anyone wishing to invest 5.6 million yen and above needed to go through the government authorities to get a license.

The lawyer Shingo Mori believes that the Chinese government will slowly accept its citizens injecting money into outside businesses. Moreso, its government, is moving to traditional socialism, leading to most companies in China being under the control of its government.

Difficulty regulating the crypto sector

The crypto sector shows significant potential in the financial world and is an excellent hedge against fiat currency inflation. While China is against digital assets, Japan still believes in crypto’s benefits its economy could offer. However, situations such as these prove how hard it is to regulate the crypto industry.

According to the Tokyo authorities, they were taking steps to penalize the real estate company. Nonetheless, its losses since the stop of operations last year led them to rethink the option.

As such, it hopes that China can join hands with its government to steer away from problems with substantial cash inflows from the crypto sector. Moreover, it is of the idea to find ways to avoid further situations like the current one in the future.

Ignorance is part of the problem, where companies receive money from unknown sources. Notably, a strong united stand would be a progressional step for both countries in ensuring proper regulation of the financial sector.

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Edith Muthoni

Edith is an investment writer, trader, and personal finance coach specializing in investments advice around the fintech niche. Her fields of expertise include stocks, cryptocurrencies, blockchain, and cryptocurrency investments.

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