China’s First Crypto Fraud Case Causes Stir
A controversial case has emerged in China, where a college student has been handed a sentence of over four years in prison for engaging in crypto fraud involving a self-created token.
As reported by The Paper, Yang Qichao was found guilty of crypto fraud for creating a virtual currency known as Blockchain Future Force (BFF) and subsequently withdrawing its liquidity, resulting in significant financial losses for an investor.
Yang’s Misdeeds Unfold
In May 2022, Yang stumbled upon a decentralized autonomous organization (DAO) named Blockchain Future Force, which was hyping up the launch of a decentralized crypto for the community. Intrigued by this, Yang decided to take matters into his own hands and created his own crypto on BNB Chain.
On the same day, Yang launched the BFF token and initially added liquidity by pairing 300,000 BSC-USD with 630,000 BFF tokens. However, shortly after this, Yang made the crucial decision to withdraw the liquidity, causing the value of the BFF tokens to plummet and investors to suffer losses.
One investor, Mr. Luo, had exchanged 50,000 BSC-USD for 85,316.72 BFF tokens just before Yang withdrew the liquidity. This move resulted in a rapid depreciation of Luo’s investment, leaving him with only a fraction of his initial capital.
Luo, determined to seek justice, managed to track down Yang through a mutual contact on WeChat and demanded compensation for his losses. When Yang refused, Luo took the matter to the police, claiming he had been defrauded of over 300,000 yuan (approximately 50,000 USD).
Legal Consequences Unfold
Following Luo’s report, the police launched an investigation into suspected crypto fraud, leading to Yang’s arrest in November 2022. Eventually, on Feb. 2, 2024, a court in Henan found Yang guilty of the crypto fraud, resulting in a prison sentence of four years and six months, along with a 30,000 yuan fine.
This case marked a significant milestone as the first criminal case in China involving crypto fraud. The second trial of the case was held on May 20 at an intermediate court, where Yang’s defense lawyer continued to argue for his innocence.
Despite the defense’s claims that both parties were well-versed in the risks of crypto speculation and that the plaintiff actually gained from the incident due to increased liquidity, the court upheld Yang’s conviction.
This groundbreaking case sheds light on the legal complexities surrounding virtual assets in China, where losses in investments fall on the shoulders of the investors. Stay tuned for more updates on this evolving story.
