Chinese police have seized over $15 million in crypto from the alleged operators that sold counterfeit tokens

By Selena On Jul 9, 2020

According to China’s Ministry of Public Security, police in Wenzhou city arrested ten people involved in executing fraudulent schemes in the crypto market. Besides, police seized more than 100 million yuan ($ 15 million) and many supercars worth $ 2 million.

Chinese police have seized over $ 15 million in crypto from the alleged operators that sold counterfeit tokens

The China’s Ministry of Public Security stated:

“The criminal case is the first in China, where victims were allegedly scammed using blockchain smart contracts to generate fake cryptocurrencies.”

Police held onto measures of the Bitcoin, Ethereum, and tie digital currencies with a complete worth of more than $ 15 million. They likewise held onto vehicles, a Ferrari and a McLaren, as well as extravagance estates possessed by the suspects.

The case was first answered to the police by a casualty, distinguished by his family name Li, in April. Li had joined a gathering on the informing stage Telegram called “Huobi Global Arbitrage HT Chinese Community.” The gathering had promoted a blockchain savvy contract professed to have the option to produce Huobi Token (HT), Huobi trade’s own cryptographic money, that could yield an exchange opportunity with an arrival of 8%.

Li repeated told the police as below:

“Simply put, you send one unit of ETH to a designated address, you will receive 60 HT. And then you can sell it to gain the difference. ”

The China’s Ministry of Public Security added:

“The price of HT on July 3 was at $ 4, while ETH was at $ 227. That created a purported $ 13 profit for every unit of ETH sent by a victim.”

After Li sent 10 ETH to the Ethereum address given by the Telegram group’s administrator, the 600 HT he received was a fake token and could not be sold. The suspects created dozens of similar chat groups with more than 10,000 fake accounts to make the victims trust them. After receiving tens of thousands of ETH, the main conspirators poured money into a lavish lifestyle with villas, sports cars, and nightclubs.

This is a new type of crime in China but does not specify exactly how they locate the suspect or if they use chain analysis to track blockchain transactions related to the case. In recent months, tracking cryptocurrency transactions has become more and more difficult because of the high involvement of illegal activities, such as online gambling, money laundering, or economic fraud.

Since June, there have been situations where Chinese over-the-counter dealers had their ledgers solidified because of fiat and crypto exchanges being sullied like this. A few brokers have likewise been held by police in past weeks to help examinations.

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