Legal Case on Virtual Currency Fraud
In a significant legal case concerning virtual currency fraud, the Yunmeng County Prosecutor’s Office in Hubei Province, China, secured a conviction against He and four accomplices. The court’s ruling comes after the group exploited a flaw in their decentralized cryptocurrency exchange platform, defrauding a total of 103 investors out of roughly RMB 77.76 million within a mere two months.
Details of the Fraudulent Activities
The fraudulent activities commenced in July 2020 when He and his associate Jia founded a tech company, subsequently launching the exchange platform with the aid of developer Du. To instill confidence among investors, they commissioned a security audit in September of the same year, leading to the issuance of a digital currency called “D Coin”. However, unbeknownst to users, they secretly implemented a “backdoor” in the platform’s code, allowing them to manipulate the currency without any oversight.
From October to November 2020, He and others exploited this backdoor by massively inflating the price of “D Coin” at dawn and converting their holdings into the virtual currency deposited by unsuspecting users. Once this conversion was completed, the price of “D Coin” was promptly lowered, essentially trapping users and preventing them from retrieving their funds, which resulted in devastating financial loss.
Legal Consequences
By March 21, the court had sentenced He, along with Du, Li, and another accomplice, to prison terms ranging from three to thirteen years for their roles in this elaborate scheme, as well as imposing fines between RMB 20,000 to 300,000. Despite filing an appeal against the initial verdict, the higher court upheld the original decision, marking a stern warning against cyber fraud in the rapidly evolving realm of digital currencies.
Conclusion
The investigation underscores the critical need for enhanced security measures in cryptocurrency operations to protect investors. (Source: China Youth Daily)
