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.
According to local news agency Baidu, on July 31, law enforcement in the Chinese province of Shaanxi successfully dismantled a crypto fraud scheme, arresting four suspects. The alleged fraudsters deceived the victim, identified as Wang, out of 410,000 Chinese yuan (approximately $56,800).
Police Crack Major Virtual Currency Investment Fraud in Yulin, Four Arrested
On July 27, the Public Security Bureau of Jingbian County, Yulin, successfully cracked a significant virtual currency investment fraud case, arresting four suspects involved in the scam valued at 410,000 yuan.
The investigation began on July 16, 2024, when the victim, identified as Wang, reported to the police that he had been defrauded of 410,000 yuan through an online virtual currency investment.
He 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 swiftly initiated an inquiry into the case. Through multiple visits and thorough analysis, the authorities managed to identify the suspects.
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.
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, travelled 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 Cracks Down on Illegal Crypto Activities Despite Recognizing Digital Assets as Property
Mainland China has enforced several bans on various crypto activities, including trading and mining, with the latest Bitcoin ban implemented in 2021 affecting virtually all cryptocurrency transactions.
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Despite these measures, the Chinese government still 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. This follows several court rulings affirming the legal status of digital assets, including a Shanghai court’s decision in favour of Bitcoin ownership rights.
Also, China’s share of Bitcoin mining has risen to second globally over the past two years.
Adjusting to this setting, 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, which operated 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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