Japan's National Police Agency announced that as a result of an investigation into Monero (XMR) transactions, 18 people involved in the fraud, including the alleged mastermind Yuta Kobayashi, were arrested.
On October 21, local media outlet Nikkei reported that the arrests came after authorities analyzed approximately 900 fraudulent Monero transactions that resulted in more than 100 million yen ($667,216) in economic damage. .
Can Monero be tracked?
Monero is a digital asset known for its strong privacy and anonymity features, which has attracted the attention of malicious actors looking to exploit its security. This has led to increased scrutiny from regulators, with multiple exchanges including Kraken and Binance forced to delist Monero from their platforms.
Japanese police said this is the first known example of using Monero blockchain data to track and arrest a criminal network. However, authorities did not provide specific details about how the transactions were analyzed beyond a “flow” analysis, leaving room for speculation as to the methodology used.
The lawsuit comes after a recent controversy involving blockchain analytics company Chainaracy. The company claimed that Monero transactions could be traced, sparking a backlash from Monero users.
Meanwhile, a post on the Monero subreddit revealed that network developers had detected and removed hundreds of malicious node IPs. These nodes may be linked to Chainaracy and may have been used to expose the IP addresses of users who initiated Monero transactions, but this has not been directly confirmed.
Movement to promote virtual currency in Japan
This development is in line with Democratic Party of the People's (DPP) leader Yuichiro Tamaki's pledge to promote virtual currencies.
In an October 20 post on X (formerly Twitter), Tamaki proposed lowering the tax on cryptocurrency profits to 20%. This is a significant drop compared to the current rate, which treats crypto profits as miscellaneous income.
A partial translation of his statement reads as follows:
“If you think that crypto assets should be taxed separately at 20% instead of being treated as miscellaneous income, please vote for the Democratic Party of the People. There is no tax when exchanging crypto assets for other crypto assets.”
The proposal is in line with Japan's Financial Services Agency (FSA) efforts to re-evaluate cryptocurrency regulation. The FSA is considering reducing taxes on digital assets and reclassifying them to create a more favorable investment environment.
In recent years, Japan has been working to strengthen its digital asset sector, requiring virtual currency exchanges to obtain a license. The move has attracted significant interest from major companies such as Binance, further elevating Japan's position as a growth hub for blockchain and crypto innovation.
