Japanese authorities are investigating whether stablecoins were used to launder money from an investment fraud scheme, adding to concerns about how digital assets can be misused for financial crime. The investigation follows the arrest of three men by Osaka Prefectural Police in March over allegations that they helped move funds linked to the fraud.
Investigators told local media that the suspects collected about 14 million yen from 10 victims across six prefectures before allegedly converting the funds into digital assets.
Police allege the suspects converted the stolen money into stablecoins and other digital assets in an effort to conceal its origin. Investigators said the men operated as private cryptocurrency brokers, arranging direct trades between individuals rather than using regulated exchanges.
That approach can make transactions harder to trace, raising concerns among regulators and law enforcement officials. Naoyuki Iwashita, a professor emeritus at Kyoto University and finance expert, warned that “once it is used in a crime, investigation becomes extremely difficult.”
The case has drawn attention to the growing use of stablecoins, which are designed to maintain a stable value by being linked to traditional currencies. Their ability to move money quickly and with limited price fluctuations has helped make them increasingly popular for payments and transfers.
Japan has adopted one of the world’s most comprehensive stablecoin regulatory frameworks, requiring issuers to meet specific legal and compliance standards.
At the same time, authorities are concerned that those features could also make stablecoins attractive for moving illicit funds. The investigation is likely to add to discussions over whether private cryptocurrency transactions should face tighter oversight.
Concerns about crypto-related crime are not limited to Japan. Tom Robinson, chief scientist at blockchain analytics firm Elliptic, recently called on stablecoin issuers and messaging platforms to do more to combat online fraud.
In a report for the Royal United Services Institute, Robinson described crypto-enabled scams as an “epidemic” and estimated that online fraud schemes generated $442 billion in losses during 2025.
He also pointed to the human toll behind many of these operations, claiming that around 300,000 trafficked workers remain trapped in scam compounds and are forced to participate in fraudulent activities.
(adsbygoogle = window.adsbygoogle || []).push({});Separately, Osaka police are investigating another case highlighting risks associated with informal transactions arranged through social media. According to authorities, a man in his 20s was injured after being robbed of 5 million yen by suspects he had contacted through social media.
Police said the victim traveled to Osaka to meet the seller before two suspects allegedly attacked him and fled with the cash.
