Japanese authorities dismantle Monero-linked scam in landmark investigation

Japan’s National Police Agency announced that an investigation into Monero (XMR) transactions led to the arrest of 18 individuals involved in a scam, including the suspected ringleader, Yuta Kobayashi.

On Oct. 21, local media outlet Nikkei reported that the arrests followed the agency’s analysis of approximately 900 fraudulent Monero transactions, which reportedly caused over 100 million yen ($667,216) in financial damage.

Can Monero be traced?

Monero, a digital asset known for its strong privacy and anonymity features, has attracted the attention of malicious actors who attempt to exploit its security. This has also drawn the scrutiny of regulators, leading several exchanges, such as Kraken and Binance, to delist Monero from their platforms.

The Japanese police said this marks the first known instance of using Monero’s blockchain data to track down and apprehend a criminal network. However, the authorities did not disclose specific details beyond analyzing “flows” about how the transactions were analyzed, leaving room for speculation about the methods employed.

This case comes after a recent controversy involving blockchain analytics firm Chainalysis. The firm claimed that Monero transactions might be traceable, sparking backlash from Monero users.

Meanwhile, a post on Monero’s subreddit revealed that the network developers had detected and removed hundreds of malicious node IPs. These nodes, possibly linked to Chainalysis, might have been used to expose the IP addresses of users originating Monero transactions, though no direct confirmation has been made.