China frozen nearly $1 million worth of crypto assets and arrested eight people for defrauding its investors

China may have given up on the crypto race, but its campaign to crack down on related crime continues as police uncover a potential carpet-pulling.

Chinese authorities crack rug pull scam, arrest eight individuals

The Chizhou City Public Security Office in the eastern province of Anhui has frozen six million yuan or nearly $1 million worth of crypto assets and arrested eight people for defrauding its investors since last year.

Chinese authorities have arrested eight people in a carpet-pulling scam involving 50 million yuan or $7.8 million in digital assets as Beijing’s crackdown continues. The report suggests that some investors have been duped in a scheme that allows the alleged perpetrators to transfer liquidity to an “anonymous pool,” which then launders the funds without the investors’ consent.

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

Police have yet to mention the name of the malicious DeFi project, but Chinese crypto-journalist Colin Wu reported the platform as GainSwap.

Rug pulling has become a common thing in the crypto industry. As previously reported, they account for 37% of total scam revenue in 2021 compared to just 1% the year before.

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

China’s opposition to cryptocurrencies is not new. As a result, policymakers have gone the CBDC route, in sharp contrast to assets like Bitcoin and Ethereum.

Although it has been in development since 2014, the People’s Bank of China (PBoC) has not yet fully implemented the digital yuan nationwide. In an attempt to boost adoption, the central bank has scattered tens of millions of tokens. CBDC pilot projects have also been announced in 10 regions, including Shanghai and Beijing. These steps have resulted in transactions exceeding the $1 billion mark.

Earlier this month, Chinese tech giant Tencent announced the country’s CBDC support to its WeChat Pay wallet, one of mainland China’s prominent payment platforms.

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