Recently, Japanese authorities have apprehended a teenage high school student suspected of running an illicit cryptocurrency exchange specializing in Litecoin (LTC).
The Tokyo Metropolitan Police Department’s Cyber Crime Control Division has charged an 18-year-old male with violating the Payment Services Act, marking a significant crackdown on unregistered virtual currency operations.
Arrest and charges
The unnamed teenager, residing in Miyakonojo, Miyazaki Prefecture, allegedly amassed approximately $20,000 in fees from facilitating trades on his platform. Authorities assert that the individual, a third-year high school student, operated the exchange without obtaining the necessary permits mandated by Japan’s regulatory body, the Financial Services Agency (FSA).
According to police reports, the suspect purportedly conducted Litecoin transactions catering to a clientele of fellow students and adults. At least 30 customers, including 20 teenagers, have been identified in connection with the case. The teenager faces charges of operating a virtual currency exchange business without proper registration, violating Japanese law.
Investigators revealed that the accused teenager utilized social media platforms, notably Twitter, to solicit customers and advertise his exchange services. The suspect allegedly executed numerous transactions between July and September 2023, offering competitive exchange rates to lure clients away from registered platforms.
Customer transactions
Among the identified transactions, authorities highlighted instances where the suspect received payments via popular digital payment services like PayPay. Notably, two teenage high school students reportedly made a PayPay payment of approximately $400 to acquire Litecoin tokens from the suspect. Furthermore, a female office worker in her 40s confessed to engaging in Litecoin transactions with the teenager, exchanging around $166 in August of the same year.
Broader regulatory context
Two key pieces of legislation govern Japan’s cryptocurrency exchange industry: the 2017 Payment Services Act and a subsequent 2020 amendment. The stringent regulatory framework requires cryptocurrency exchange operators to obtain permits from the FSA, a process often fraught with complexity and time-consuming procedures. The difficulty in obtaining official registration has led to the proliferation of unregistered platforms, exacerbating law enforcement challenges.
