Ripple exchange manager arrested for fraud

The Japanese manager of the Ripple exchange and trading platform, 31-year-old Yuki Takenaka, has been arrested for allegedly swindling investors. This arrest occurred during a large-scale investigation of fraudulent cryptocurrency schemes. Takenaka is the founder and operator of Ripple Trade Japan (RJT), which traded the ripple cryptocurrency,(XRP). According to local media, he is suspected of swindling ¥1.4 million ($12,500) from an investor in the Miyagi prefecture.

The depositor was swayed into sending the cash into the exchange’s bank account in March 2015. Users invested money in RJT in exchange for IOUs, signed documents acknowledging debt. The investors could then exchange their IOUs with each other or convert them into Ripple’s XRP tokens or cash. Authorities allege that Takenaka took the money despite the fact that the firm, being in a state of collapse, was unable to make refunds at the time.

The currency exchange was set up in Hamamatsu, Shizuoka prefecture in May 2014. By March 2015, trouble with Ripple Trade Japan surfaced as the investors were unable to locate Takenaka or get their cash refunded. The façade allegedly built by Takenaka finally broke when the RJT website shut down. Claims have been made that Takenaka swindled an additional ¥17 million ($150,000) from at least 40 people in Japan by promoting a false campaign waiving deposit fees. The cybercrime unit of Tokyo Metropolitan Police is currently investigating these allegations.

Takenaka is also suspected of exploiting his firm’s systems for personal gain by issuing fictitious IOUs worth more than ¥120 million ($1 million) between November 2014 and February 2015. Allegedly, he used the money for personal expenditures after converting the IOUs to cash. The police plan to carry out a thorough search of Takenaka house and other areas of Hamamatsu.

According to the police, Takenaka, a resident of Kyoto, has admitted to most of the charges.

Ripple, the third largest cryptocurrency after Bitcoin and Ethereum, is a San Francisco-based FinTech startup that acts as both a cryptocurrency and a digital payment network for financial transactions. Its blockchains are powered by its XRP digital token.

The case is similar to the collapse of Japanese bitcoin exchange, Mt Gox, in 2014. In that case, Mark Karpeles, founder and former CEO, was been charged with the embezzlement of ¥341 million. Karpeles is pleading ‘not guilty’ to the charges against him.  His trial at the Tokyo District Court is ongoing.