Shenzhen Police Arrested 15 Crypto Criminals For Scamming About $31.6 Million

Key Points:

• Shenzhen police have successfully arrested 15 crypto criminals for crypto fraud up to 220 million yuan (about $31.6 million).
• 1,500 victims were scammed through a fake cryptocurrency trading platform.
• The defendants will receive a sentence of between 3 and 13 years in prison.

There are a lot of people getting scammed and the amount of scam is too high. Especially when cryptocurrencies become popular, many investors who wish to get rich quickly have become lucrative prey for crypto criminals. People can’t help but wonder what super tricks did the scammers use? This must have started four years ago…

Germination

In 2018, Amin, who dreamed of getting rich overnight, suddenly came up with a plan: Now that blockchain and cryptocurrencies are so popular, it’s a good way to make a fortune. Why don’t you ask Ah Hua, a computer student, and they will come up with a plan and earn a huge amount of money.

A fake trading platform

Amin gathered Ah Hua and others to illegally set up a fake digital exchange platform through setting up servers abroad, and go online to operate and trade the coins created by Amin. He created himself to scam immature investors.

This coin is known as a digital currency according to blockchain technology, but it is actually an illegal platform-issued virtual currency, without any market value and considered capital.

Investors can register for account trading on the platform by scanning the proposed code. They can transfer funds directly to the personal bank account published by the platform to buy this money or buy virtual currencies like USDT (USDT) on other websites first, and then transfer to the platform to exchange this island coin for transactions.

Set traps

To attract more investors’ attention, Amin and others distributed deceptive and tempting platform promotional materials by holding a “Chain Trader Festival” and other means, such as promising that “the scam coin will increase 1 cent per day and increase 1,000 consecutive days.”.

The scammers claim that “investors with an investment amount of more than one million yuan are regional partners and pay dividends to regional partners proportionally” and ensure that “investors Referring others to buy coins will be rewarded according to the amount of coins purchased by the referrer“, etc.

With these tricks, attracted investors to buy more coins, keep more coins, not sell coins and develop offline.

Realizing it is too late

In the early stages, to attract investors to follow and buy, Amin and others manipulated the price of this scam coin from the initial issue price of 0.25 yuan each to 1.31 yuan each coin.

Seeing that the price of this coin has increased several times in a row, investors believe in the high returns advertised by the platform, so they boldly continue to increase their investment.

But the good times did not last long, after December 4, 2018, the price of the U coin changed dramatically, continuously falling from a high of 1.31 yuan/coin to almost zero price until it becomes untradable. Investors woke up and realized that they had been scammed and they demanded their money back.

Judgment for scammers

The Shenzhen Procuratorate prosecuted a series of virtual currency fraud cases of this scam digital exchange, 15 defendants were sentenced to between 3 and 13 years in prison. The series of cases involved a total of nearly 1,500 victims and the amount of money being scammed amounted to 220 million yuan.

China tightens regulations on virtual currencies

According to the “Notice on the Continued Prevention and Handling of Risks from Exaggerating Virtual Currency Trading” co-issued by the People’s Bank of China (PBOC) and ten other departments, related business activities Going to virtual currency is illegal financial activity, and overseas virtual currency exchanges that provide services to residents in this country through the Internet are illegal financial activities.

China has warmly reminded investors to be highly vigilant against virtual currency investment scams, maintain a reasonable investment mentality, choose legal investment methods, and do not believe in high returns, less impulsive, more cautious, raise awareness of prevention, avoid falling into scams.

The PBOC also banned financial institutions, payment companies, and Internet companies from facilitating cryptocurrency transactions.

The government will “resolutely prevent cryptocurrency speculation, related financial activities and misconduct, in order to protect people’s assets and maintain economic, financial and social order.”, PBOC announced on the website.

There are three main reasons for China’s decision to “eliminate” cryptocurrencies from their economic sector.

First, the PBOC said that in recent years, “trading and speculating in Bitcoin and other cryptocurrencies have become commonplace, disrupt the economic and financial order, give rise to money laundering, illegal capital raising, fraud, multi-level models and other illegal activities”.

Second, China is considered a fertile ground for cryptocurrency mining due to low electricity costs in some areas. That is putting the country at risk of an energy crisis and hindering efforts to be carbon neutral by 2050.

Ultimately, analysts say, China is clearing the way for its own digital yuan (eCNY). Besides, the country is planning to amend the law to make eCNY trading legal and ban the private sector from issuing digital currencies. An official from the People’s Bank of China said that the eCNY is intended to protect China’s “monetary sovereignty”.

China’s National Development and Reform Commission (NDRC) says it is launching a nationwide crackdown on crypto-related activities. Previously, this was only at the local level.

However, despite the ban on digital assets, China has unwittingly become the silent crypto whale, with such power that it could drag the crypto market down in seconds if would like.

This data was originally published on November 3 by Ki Young Ju, founder and CEO of blockchain data analytics platform CyptoQuant. Reportedly, Mr. Ki Young Ju also posted a list of public companies with the largest Bitcoin holdings, with the leading being MicroStrategy of the US with 130,000 Bitcoins. But Chinese authorities seized 194,000 BTC, 833,000 ETH and others from the PlusToken scam in 2019. They confiscated this amount of $6 billion worth of assets for the national treasury.But Chinese authorities seized 194,000 BTC, 833,000 ETH and others from the PlusToken scam in 2019. They confiscated this amount of $6 billion worth of assets for the national treasury.

If China starts selling the confiscated 194,000 BTC, that could severely damage the crypto market, causing the Bitcoin price to drop to $5,000 in less than 7 seconds.

The ban doesn’t seem to stop the country from being among the top 10 digital asset adoption countries.

Even so, Bitcoin mining in China continues after a negative period when the government issued a ban. According to data by crypto analytics platform Bitrawr, there are around 65 accessible Bitcoin nodes in the mainland as of Nov.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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