Chinese authorities seize $15 million in cryptocurrencies, arrest 10 scammers. Police in the Chinese city of Wenzhou, Zhejiang province, have cracked a criminal case and confiscated millions of dollars in cryptocurrencies, local media announced on Thursday, calling the case the “first criminal case involving smart contracts” in the world.
After receiving a complaint in April from Li, a Chinese citizen who joined a Telegram group called “Huobi Global HT [huobi token] Chinese Community Arbitrage,” the authorities began investigating the case. The group provided tutorials about an investment scheme that group members claim to be profitable.
Li explained to the police “Simply put … transfer your ETH (ethereum) to the account designated by the other party, and the other party will return 60 HT (huobi). After exchanging, the HT value added part is the money you make, the profit is around 8%.”
The price of HT on July 3 was 28.61 yuan ($4) and the price of ETH was 1,589 yuan ($227), which should translate to a profit of about 8%, according to the report. However, when Li transferred his 10 ETH, worth 12,000 yuan ($1,714), to the account provided by the group owner, the other party returned 600 fake HT coins that could not be traded, Li claimed. He then reported to the police after realising he was scammed.
The police then launched an investigation into the scheme and found that the group had more than 13,000 members. However, more than 10,000 accounts were idle “zombie accounts” and the remaining members and staff were actually computer bots.
“There are only a few administrator accounts that are actually online, and their task is to publish tutorials to lure victims to be fooled.” the report details.
The arrests and confiscation were made after a month of investigation. The police say that this scam has swindled over 100 million yuan from more than 1,300 victims. Also seized were real estate and luxury cars, such as a Mclaren and a Ferrari, worth more than 13 million yuan.
The accused allegedly confessed to the crime after they were arrested.
[image: Hyunwon Jang]