As reported by The Asahi Shimbum, a group of eight people have been arrested in Tokyo, Japan after authorities discovered their alleged investment firm pyramid scheme. The company – named “Sener” – claimed to be a US-based investment firm and succeeded in raising the yen equivalent of $68M from 6,000 victims who expected Sener to be buying and trading cryptocurrency on their behalf.

The authorities were first tipped off when they found Sener had not registered their business as required by the Financial Instruments & Exchange law. Subsequently, 73 victims filed lawsuits against Sener claiming 37 million yen in damages.This prompted the authorities to investigate Sener – leading to 8 arrests. Of the 8 men arrested, six pled guilty to the allegations, while two maintained their innocence.

What Was Sener?

Sener seems to be a basic investment pyramid scheme. Thecompany raised money in cash and cryptocurrency, promising healthy returns for their customers. Asahi Shimbum explains:

According to a group of lawyers representing victims and investors, the suspects at seminars and other gatherings promised monthly returns of 3 to 20 percent, based on the investment.

Such sky-high returns are usually the first identifier of any ponzi scheme, while the recruitment model –  Sener offered bonuses for bringing in other investors – is also a hallmark of pyramid schemes.

The company even held seminars to bring in new investors, and their promotional marketing videos can still be found on YouTube. In these videos, Sener claims to have $15B in revenue, 2,000 employees, and partnerships with Bank of America, CitiBank, and others.

A blogpost on BehindMLM, published in 2017, exposes a few other red flags. The blog post highlights the fact that Sener’s corporate office address on their website is registered to a company called Servcorp, who sells virtual office space. The article also found that the Sener website was created in January, 2017, not 2007 when the company was “founded.”