16 individuals were arrested by the Japanese authorities earlier this week, from 10 prefectures, for allegedly spreading virus that used user devices to mine cryptocurrency without permission.

Japan’s Crackdown on Anonymous Cryptocurrencies

Over the past year, major antivirus conglomerates including Kaspersky have warned users of computers and desktops against cryptocurrency mining malware, and the warnings were not exclusive to day-to-day cryptocurrency users because hackers have been spread malware on any available device to run software behind the scenes and mine cryptocurrency without disclosing the operations to the users.

Funds generated by the cryptocurrency mining malware is then laundered using private and anonymous cryptocurrencies such as Monero and Zcash, which the authorities cannot trace.

The Asahi Shimbun, a mainstream media outlet in Japan, reported that three men were arrested on Friday on suspicion of illegal use of computer virus, and 13 more individuals are expected to be arrested in the upcoming weeks for illicitly distributing malware that mines cryptocurrency.

According to local police, the suspects mass distributed a program called Coinhive, a type of malware that mines Monero due to its anonymity, through a website they operated. As soon as users stumbled upon the website of the hackers, Coinhive was downloaded to the computers of users, installing themselves and autonomously running in the background, mining cryptocurrency.

“Police decided to arrest the men because they determined legal violations were made when the site users were not asked for their consent. In addition, the users’ computers consumed more electricity after the mining program was activated,” Asahi reported.

The case was revealed merely a week after the Japanese authorities announced that they are closely cooperating with the Financial Action Task Force on Money Laundering (FATF), an organization formed by the G7 to oversee 37 countries and their financial networks.

During a meeting with the FATF, composed by the Group of Seven that includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, Japanese financial authorities proposed the international governing body to unify cryptocurrency regulations and restrict the usage of anonymous cryptocurrencies in money laundering.

Ever since the report of Mainichi Shimbun, the oldest and the most widely read newspaper in Japan, released a report that claimed the Yakuza, Japan’s biggest crime syndicate with more than 100,000 users have been using Monero and Zcash to launder money, the Japanese government has been focused on strictly regulating the cryptocurrency market and restricting the usage of private cryptocurrencies.

Other Countries May Join

Since 2017, South Korea, the third largest cryptocurrency market behind the US and Japan, has said that it will follow cryptocurrency regulations imposed by the international financial community, including the FATF.

In the short-term, it is likely that leading economies will adopt a national licensing program for cryptocurrency exchanges like Japan, and then move onto imposing additional regulations for Zcash, Monero, and Dash, the three cryptocurrencies that are most often used by criminals to launder funds gathered in other major cryptocurrencies like Bitcoin and Ethereum.

The Japanese government emphasized that it cannot crackdown on anonymous cryptocurrencies alone and it needs the rest of the G7 and the G20 to properly prevent criminals and large-scale crime syndicates from using cryptocurrencies to finance illegal operations.

“It’s nearly impossible for Japan to handle the problem alone. Even if trade is restricted to only domestic transfers or monitoring is enhanced, it’s still not enough to counter money laundering. It would be best if all the group of 20 industrial and emerging nations and regions (G-20) would take the same steps toward prevention,” Japan’s Financial Services Agency spokesperson said.