The owners of the Rolexes and other pricey timepieces earned monthly deposit fees by loaning them to Osaka-based Toke Match, which would then rent them to customers.
Neo Reverse, the company that operated Toke Match, announced on January 31 the termination of its service and promised it would return all watches.
But the owners of around 900 watches worth 1.9 billion yen ($12.6 million) have not been reunited with their property, the Asahi Shimbun daily and other media outlets reported, citing a group of about 190 owners.
Some of the watches have even been spotted on an online auction site, prompting owners to file dozens of complaints to police around Japan.
The auction site's operator Valuence Japan told AFP that at least 20 watches it handled had serial numbers matching those loaned to Toke Match.
"We immediately stopped circulation of these watches to prevent further damages from happening" through reselling, a spokeswoman said last week.
Half of the watches were already on the auction site before the Toke Match service was terminated, she said.
The Sharing Economy Association, Japan said in a statement that it had received reports that some of the watches were circulated in second-hand stores too.
The size of Japan's "sharing economy" market is rapidly growing, reaching 2.6 trillion yen ($17 billion) in the last fiscal year, the association says.
Neo Reverse was one of around 400 members of the organisation but was delisted on February 1 following complaints by the owners that their watches had not been returned.
Tokyo police have obtained an arrest warrant for Toke Match's owner Takazumi Kominato, 42, on suspicion of embezzlement of a Rolex watch, Jiji Press reported Wednesday, citing investigative sources.
He is suspected of selling the Rolex he loaned from an owner to a second-hand dealer for 650,000 yen in January, the report said.
However, Kominato flew out of Japan in late February for Dubai, and police plan to put him on the international wanted list, Jiji said.
