Suspects behind $54M AI-based digital currency scam in Japan arrested

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Four people who allegedly scammed $54 million have been arrested by police in central Japan. Authorities said the suspects recruited investors by promising very high returns, claiming to be relying on artificial intelligence to optimize profits.

According to reports in Japan, the four men were the operators behind the Oz Project, a cryptocurrency investment platform. As with any other scam, it promised ‘too-good-to-be-true’ returns. Oz Project claimed to guarantee users that they would get 100% of the principal they put in as well as “2.5 returns on their investment in four months,” Japanese newspaper Asahi Shimbun reported.

Police in Aichi Prefecture identified that suspects as 46-year-old Takuya Hashiyada, 52-year-old Masamichi Toshima, 59-year-old Shoji Ishida, and 61-year-old Yukihiro Yamashita. The four allegedly at least JPY6 billion (US$54.5 million). They managed to lure over 20,000 investors, authorities said.

To lure investors, the four organized seminars across Japan, engaging with potential investors, investigators said. Those that fell prey were urged to join an investor group on LINE, a popular messaging platform in Japan. This strategy allowed the investors to onboard even more victims, mostly friends and family, by inviting them to the group, allowing the scam to grow even faster.

While the alleged orchestrators are only now getting arrested, the scam has been ongoing for years now, the paper details. In 2019, some of the disgruntled investors filed criminal charges against the Oz Project. Since then, the police have reportedly been searching for the operators.

The scam is just the latest in a long line of fraudulent firms that are posing as legitimate digital currency investment platforms. A report by the U.S. Federal Trade Commission (FTC) revealed that Americans have lost more than $80 million in such scams since October 2020. This represents a 1,000% rise from the fall of 2019. The median loss per victims stood at $1,900 during this time.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and
Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.