Alleged Crypto Pyramid Scheme – Most countries in the world are trying to figure out regulations around digital currency and are trying to figure out a legal framework for the regulations around crypto. Recent incidents around cryptocurrency fraud have conveyed the importance of the regulations quite impactfully. Similarly, one of these such cases has happened in Tokyo.
Tokyo Police arrested 8 Individuals who had collected $68.42 Million in cash and digital assets from more than 5000 people, in the scam popularly called the “Crypto Pyramid Scheme.”
According to sources, the individuals were involved in promising people with 3-20% returns depending on the amount of investment they made. They also promised people higher returns if they brought in more investments through other people.
The group claimed that the investments were being made into an American firm called “Sener” which would manage the funds, and investments, and would transfer the benefits directly to the people who invested.
Japan’s Financial Services Agency (FSAI) has a requirement for groups that take investments from individuals for securities or cryptocurrencies, that they must register themselves with FSAI and go through a validation process that ensures the legitimacy of the services or products being offered. The above group of individuals did not register themselves for the process.
Managing the Boundary Between Regulations and Growth of Cryptocurrencies
Alleged Crypto Pyramid Scheme – There is a need to regulate cryptocurrency transactions. But at the same time, if the regulations are implemented, investors may be less interested in crypto projects. So there needs to be a way to balance both the interests.
Experts around the world think that a good way to do this would be by regulating exchanges. Which would solve many of the problems because most of the time, exchanges are the gateway for the public’s investments. Therefore, regulating exchanges would lead to reduced scams, fraud, and would still encourage the industry’s growth.
Ajit Pai, chair of the U.S. Federal Communications Commission (FCC) spoke about the elementary industries, saying:
“So one of the challenges is to figure out how we find a level playing field. That promotes investment and innovations for all these firms without disadvantaging any one of them. The second issue is that these are very dynamic industries and one can foresee in coming decades. Things like artificial intelligence, machine learning, the blockchain, quantum computing will have a significant impact on how communications networks operate.”