Chinese police seize $ 62 million ETH, USDT, FIL in a Filecoin mining Ponzi program

Chinese law enforcement agencies have seized crypto assets worth 400 million yuan, or $ 62.5 million, in order to crack down on an alleged Filecoin mining Ponzi program.

Xuzhou City Police have arrested 31 people who allegedly ran Ponzi programs linked to a Shanghai-based filecoin miner maker, IPFSUnion. The suspects were arrested in several cities including Shanghai, Wuhan and Shenzhen, but it is not clear whether they belong to IPFSUnion or the distributor involved.

Chinese Local police seized crypto assets such as ETH, USDT and FIL as part of the raid.

IPFSUnion itself said in a statement on Friday that the suspects bought the equipment with allegedly illegal money and assisted the police in the investigation. As a result, the company has now limited the number of miners in the data centers to what the police allow, and nothing will be restored until the investigation is complete.

IPFSUnion is one of the top 10 Filecoin miners according to total effective storage capacity and also sells miners and computing power directly or through distributors to end users.

It remains unclear whether IPFSUnion has been accused of being directly involved in a Ponzi program or of knowingly allowing its dealers to oversold non-existent equipment.

But Filecoin-based Ponzi schemes have been rampant in China since 2018, after Protocol Labs raised $ 200 million in an ICO the previous year.

Before Protocol Labs launched the Filecoin test and mainnet in 2020, the design of the network had seen many changes in terms of equipment and software specifications suitable for mining FIL, the network’s native cryptocurrency.

But some Chinese companies and brokers have exploited such information gaps to sell fake or below-average Filecoin miners with promised profits to investors in China. Protocol Labs was forced to issue an anti-fraud statement in late 2018 to warn investors that it was not related to the sale of mining equipment.

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