Chinese authorities take action against a crypto carpet and arrest 8 participants

Chinese may have given up the crypto race, but the populous nation’s campaign to tackle this sector-related crime rages on as police break up a potential carpet move.

Chinese authorities are cracking down on the carpet-pulling of cryptocurrencies

The public security bureau of Chizhou city, east China’s Anhui province, has frozen 6 million yuan (almost $1 million) worth of crypto assets and arrested eight people for defrauding investors — the fourth since last year.

The case involves 50 million yuan ($7.8 million) in digital assets as Beijing’s crackdown continues. report recommend that some investors were being scammed into a scheme that allowed scammers to transfer liquidity to an “anonymous pool” and then launder the money without investor consent.

It all started after an investor reported a cryptocurrency loss of 590,000 yuan ($92,882) in June 2021. After a thorough investigation, Chizhou police arrested eight people from different provinces including Guangdong, Sichuan and Hunan in December, who also confiscated luxury cars and mansions from the defendants, who are believed to have defrauded investors.

Regarding the incident, Chi Chau authorities said:

“Following investigation and analysis by the Police Task Force, we have determined that this case is a typical case of illegal trading of virtual currencies using blockchain technology.”

Police have yet to name the project, but Chinese crypto journalist Colin Wu has report That platform is GainSwap.

Carpet pulling is becoming increasingly popular in the crypto industry. As previously reported, they account for 37% of total crypto fraud revenue in 2021, compared to just 1% the year before.

The latest news comes less than a week after Chinese law enforcement disclosure Handled 259 cases related to crypto laundering. The Ministry of Public Security also said it had seized 11 billion yuan worth of cryptocurrencies, or nearly $1.7 billion.

Chinese’s hostile stance on cryptocurrencies is not new. With that, policymakers have explored and established a central bank digital currency (CBDC), in stark contrast to decentralized cryptocurrencies like Bitcoin and Ethereum.

Although it has been in development since 2014, the People’s Bank of China (PBoC) has yet to fully adopt the digital yuan (e-CNY) nationwide. To drive adoption, the PBoC has issued tens of millions of tokens and launched across 10 regions including Shanghai and Beijing, with over $1 billion in trading volume.

Earlier this month, tech giant Tencent announced the addition of support for e-CNY to its WeChat Pay wallet, one of China’s leading payment platforms.

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