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[August 2022]

Be careful with investment in crypto-assets solicited by online friends! Don't believe easy ways to make money

Local consumer affairs centers and the like across Japan have received numerous inquiries and complaints about investment in crypto-assets (cryptocurrency), which amounted to 6,350* in fiscal 2021. NCAC issued an alert on trouble over crypto-asset contracts often experienced by elderly consumers and on suspicious investment ideas before. According to more recent information from consumers, these problems have been often caused by social media and matchmaking apps (e.g. "Being solicited by my social media friend, I transferred money to make an investment. Now I cannot withdraw money.") Another major factor is solicitation by friends and acquaintances (e.g. "My friend told me that crypto-assets were profitable and a referral fee would be given to those who introduce others. Then I trusted money to my friend, but I cannot withdraw money now.")

In order to prevent these kinds of problems, NCAC would like to share some trouble cases and issue an alert to consumers.

  1. * Some of the cases may not be related to crypto-assets in reality.

Sample Cases

[Case 1] I happened to know a foreign woman through social media. She induced me to invest in crypto-assets on an application. When I requested to withdraw money, she demanded a hefty fee
I happened to know a foreign woman through video social media. I exchanged ID for a free call app with her and started to communicate with her frequently. She introduced me a profitable investment in crypto-assets. I opened my account through a domestic crypto-asset trader and transferred 3,300,000 yen to the account with my credit card. It was the first time for me to trade crypto-assets. I downloaded a foreign trader's application as I was told. I opened my account on the app and transferred all the money from the domestic account.
When I made a profit, I told her I wanted to withdraw money. She demanded me to pay tax, deposit, etc. I paid about 1,700,000 yen in total with my credit card. Moreover, she said, "You have to pay 8% of the balance which is 50,000 yen as a handling fee. This is the last time. All the expenses are based on international fund rules. If you pay the fee, about 6,000,000 yen will be transferred to your account." The foreign trader's app does not show information on the operating company. All I know is her mobile phone number and ID for the free call app. What should I do?
(man in his 50s in November 2021)
[Case 2] One of my colleagues told me that AI-based investment in crypto-assets was profitable. Then I trusted money to him. Later I requested a refund, but no money has been returned. I have been no contact with him
One of my colleagues said, "I have made a good profit from AI-based investment: artificial intelligence determines how to invest in crypto-assets. Why don't you join me?" He solicited me again after taking a seminar. I told I didn't have enough money. He said, "You can borrow money from consumer finance and return money soon" and encouraged me to borrow money from two consumer finance companies. I borrowed 600,000 yen and handed the money to him. At first, I saw an increase from the principal 600,000 yen on my smartphone, but I cannot log in the site recently. I said to him, "I want to quit the investment. Will you give my money back?" He said, "I will turn the money into crypto-assets and give you a refund." Since then, he has never contacted me. I have been no contact with him. I want him to return my money.
(man in his 20s in December 2021)

Advice for consumers

  • Don't blindly accept any crypto-asset investment idea.
  • Check if the company concerned is registered as a crypto-asset exchange service provider. Do not trade with any non-registered company.
  • If you don't understand transaction details and risks, do not enter into a contract.
  • In case of trouble or concern, consult your local consumer affairs center right away.