The Enigma of Money by Makoto Nishibe

Author:Makoto Nishibe
Language: eng
Format: epub
Publisher: Springer Singapore, Singapore

3.3 Yenten as Pseudo-money

The Yenten Incident

Money, presupposing the existence of law and the state, circulates not because of their compelling legal force, but because it is supported by self-fulfilling ideas.

If so, money should come into being by way of a different “self-fulfilling idea” from social custom or rational prediction.

Looking at how such new monies as Yenten and Bitcoin were created (and then vanished) offers great insight into the “self-fulfillment of an idea.”

Here we will look into two virtual currencies: Yenten (also known as Enten, a pseudo-money brought about by large-scale fraud) and Bitcoin.

Yenten was a pseudo-money issued by a health product company called L&G. It took the form of points like electronic money and was payable with a cell phone. L&G, which started issuing Yenten in 2001, promised besides guaranteeing principal to “pay 90,000 yen every 3 months (the equivalent of 36 % per year) for every deposit of one million yen” to anyone enrolled as a member and eventually collected a large amount of funds (deposits) in the name of cooperation. It is reported that over 100 billion yen was collected from 50 thousand people across the country.

But after the company’s financial condition worsened around January 2007, they suddenly switched the members’ dividends from yen to Yenten and also allowed members to receive the same amount of Yenten as yen every year (100 % premium). In fall 2007, they withheld dividends in Yenten as well and many members asked for a repayment of funds. In October 2007, L&G was investigated for violating the law concerning Regulation of Receiving of Capital Subscriptions/Deposits and Interest on Deposits – the way investment and interest rates are regulated – and eventually they declared bankruptcy. In February 2009, Kazutsugi Nami, the company’s chairman, was arrested on suspicion of violating the law punishing organized crime (organized fraud) and was sentenced to 18 years in prison in 2012. This attracted a lot of attention like the Toyota Shoji incident in 1985.

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