Mainland China, known for its stringent regulations on cryptocurrencies like Bitcoin, continues to face challenges with crypto investment frauds. Despite the nation’s comprehensive crypto ban, fraudulent activities persist.
On July 31, law enforcement in Shaanxi Province successfully dismantled a crypto fraud scheme, arresting four suspects. The alleged fraudsters deceived a victim, identified as Wang, out of 410,000 Chinese yuan (approximately $56,800), according to local news agency Baidu.
Police Uncover Major Crypto Investment Fraud in Yulin, Four Suspects Arrested
The Public Security Bureau of Jingbian County, Yulin, cracked a significant virtual currency investment fraud case on July 27, arresting four suspects involved in the scam valued at 410,000 yuan. The investigation began on July 16, 2024, when Wang reported being defrauded of 410,000 yuan through an online virtual currency investment scheme.
Victim Lured by Promises of Guaranteed Profits
Wang recounted being lured into the investment by individuals he met online who claimed they knew a system loophole that guaranteed profits from crypto. Following Wang’s report, the Criminal Investigation Brigade initiated an inquiry. Through multiple visits and thorough analysis, the authorities managed to identify the suspects.
Swift Police Action Leads to Arrests
The swift action of the police led to the arrest of suspects Zhai and Li in Zhengzhou City, Henan Province, on July 23. Subsequently, suspect Wang and another individual named Li were apprehended in Kaifeng City, Henan Province, on July 25. The four suspects are now criminally detained on fraud charges, and the case is under further investigation.
Details of the Fraudulent Scheme
The investigation revealed that in July 2024, the victim, Wang, was persuaded to invest in virtual currency through an app, influenced by online conversations where the other party claimed to know system loopholes that would guarantee profitable returns. On July 4, in an attempt to profit from virtual currency, suspect Zhai, along with Wang and the two Lis, traveled to Jingbian County. They conducted a transaction with Wang, selling him virtual currency and subsequently taking away 410,000 yuan in cash, making a profit of over 50,000 yuan.
China’s Continued Crackdown on Illegal Crypto Activities
Despite enforcing several bans on various crypto activities, including trading and mining, China recognizes cryptocurrency as virtual property protected by law, allowing individuals to hold digital assets. Recently, a local court report recognized cryptocurrencies as legal property, suggesting ways to handle crypto-linked crimes without infringing on private rights.
Recent Efforts to Combat Crypto-Related Crimes
Chinese law enforcement has been actively cracking down on illegal crypto-related activities, regularly uncovering fraudulent operations. In December 2023, the Chinese State Administration of Foreign Exchange dismantled an underground bank that used crypto to offer illegal exchange services. This scheme, operating across 17 provinces with over 1,000 bank accounts, moved over 15.8 billion yuan ($2.2 billion) to purchase crypto on exchanges overseas and provide yuan exchange services.
Additionally, a court in China sentenced members of a gang involved in money laundering using the yuan central bank digital currency to prison terms ranging from seven to 16 months. This gang laundered 200,000 Chinese yuan ($27,580) in digital form over four days in mid-September in Shaoxing, Zhejiang Province.
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