Ripple cryptocurrency exchange in Hamamatsu, Shizuoka Prefecture, was raided by police as they closed in on the manager of the exchange who was looking to make off with ¥1.4 mln ($12,470) of one of their customer’s money.
Yuki Takenaka, the 31-year-old founder and head of a company operating the Ripple exchange, collected his stolen funds even though his firm was in a state of collapse and unable to make refunds at that time.
Scam
It is the first arrest in Japan made in connection with a bourse of the Ripple virtual currency, as Takenaka has admitted to most of the charges, according to the police.
Having set up the exchange in May 2014, Takenaka quickly fell out of favour as users were unable to withdraw cash or contact him.
In a strange business model, his company collected money from its users in exchange for IOUs, or written acknowledgements of debt, needed for Ripple online transactions. Users could exchange the notes with Ripple or convert them into cash.
But it has also emerged that Takenaka allegedly swindled more than ¥10 mln out of a dozen users by false advertising that his company charges no commission.
Additionally, there are investigations into the supposed issuing of fictitious IOUs which amount to approximately ¥120 mln.
Ripple’s push for legitimacy
Ripple, as a cryptocurrency, is slightly different to others, as they are looking to become a legitimate digital currency for use within the banking sector; and they pride themselves on being centralised.
The Ripple currency is usually used for international payments and cannot be used for merchandise purchases.
Ripple is looking to break into the banking market with its tough regulations, and while this incident has nothing to do with Ripple as a currency, it shows yet again that the crypto market is still a wild west for many and there is very little protection for individuals.