Japanese police arrested Yuki Takenaka, head of Ripple Trade Japan (RTJ) who is believed to have issued an IOU to a customer in Miyagi Prefecture for Ripple currency worth 1.4 million Japanese yen. Mr Takenaka is also believed to have issued fictitious IOUs worth 120 million yen to other customers have well. This was done despite the absence of money to back the IOUs. He has already admitted to the allegations.
Metropolitan Police Department is already investigating Mr Takenaka as he has been blamed for defrauding about 17 million yen from more than forty people in Japan since February 2015. Ripple exchanges issue online IOUs after receiving money which includes commissions from its customers. Users are allowed to exchange their IOUs with each other and they also have the option to convert them into cash via the exchanges.
This could be a major set back for the Ripple (XRP) as it is one of the major cryptocurrencies with large number of users and marketcap. Ripple was developed by US startup for doing large money transfers with low fees. Right now, Ripple is a top-5 cryptocurrency coin in terms of marketcap.
Ripple Trade Japan (RTJ) was set up back in May 2014 in Hamamatsu, Shizuoka Prefecture. (via asahi.com)