The tanuki is a kind of canid native to Japan. Over the years it has gotten quite a reputation... or rather, its testicles have.
Raccoon dogs are not related to raccoons, but they are related to dogs. In fact, they are a basal species of canid, which means they're the earliest offshoot from the line of animals that became modern dogs. Raccoon dogs are still found all over eastern Asia, but tanukis are the specific species found in Japan, where they have gained something of a reputation.
One part of them has earned more fame than the rest. In real life, the scrotum of a tanuki is proportionate to its body. In art, tanuki use their huge scrota as canopies, blankets, and bludgeons. Don't believe me? We've covered it on the site. People have made up songs about the large, swinging sacs of the tanuki. They've made movies about the testicled tanuki. There is even tanuki sculpture, for those who want a hands-on experience.
To us it looks sexual, but as far as anyone can tell, it's more of a visual pun. According to legend, people who worked with gold would wrap the gold in a tanuki skin before they would hammer it out into sheets. The sheets and the skin would stretch. And since the phrase for a bag of gold was pronounced "kin no tama" and the phrase for testicles was pronounced "kin tama," the testicles, the stretching, and the tanuki all got smushed together into a very weird legend.
Image: Highland via Wiki Commons.