3 months ago
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China, a country known for its stringent regulations against cryptocurrencies, has recently witnessed a new instance of cryptocurrency-related fraud. This rise in fraud is particularly noteworthy for China, given that while other countries embrace the crypto industry, China chose to implement a nationwide ban on cryptocurrency activities.
Unraveling the Scam: A Detailed Breakdown
According to the latest report from the local news agency Baidu, the authorities of Shaanxi, an inland province in Northwestern China, have recently dismantled a notable digital currency scam operation, bringing to light the persistent vulnerabilities that plague investors within the region regardless of its crypto ban.
Related Reading: ‘Step Up’: Justin Sun Calls For Change In China’s Crypto Stance Following Trump’s Speech
On July 16, the victim, known by the pseudonym Wang, reported a substantial financial loss to the local police. According to the report, Wang was deceived into investing 410,000 Chinese yuan (approximately $56,800) into a fraudulent digital currency scheme.
The scammers lured him through an online application, convincing him of a supposed ‘system loophole’ that guaranteed significant crypto profits, which, in reality, did not exist.
Upon becoming aware of the scam, the Criminal Investigation Bureau of Shaanxi was quite swift with their response. The report revealed that after a “meticulous” investigation, which included multiple visits and data analysis, law enforcement was able to trace and apprehend the culprits.
The arrests were made in a coordinated effort on July 23 and July 25, capturing four suspects—Zhai and Li in Zhengzhou City, and another duo, Wang and Li, in Kaifeng City, Henan Province.
According to the report, these individuals are now facing criminal fraud charges, as authorities continue to delve deeper into the investigation.
The Persistence In Crypto Scams in China
It is worth noting that the fraud incident that took place in Shaanxi is one of many digital currency fraud schemes that have been busted in China in recent times despite its ban.
Back in May, Bitcoinist reported that Chinese law enforcement uncovered a “covert banking network” that used cryptocurrencies to execute “unauthorized foreign exchange transactions” that summed up to roughly 2.14 billion yuan ($295.8 million). As reported, this secret banking entity leveraged the crypto feature of “anonymity and decentralization” to carry out unlawful transactions.
Notably, amid the growing trend of crypto scams in the region, the authorities appear to be putting efforts into curbing these illegal activities. Just recently, China and the United Arab Emirates (UAE) allied to fight cybercrime, which now often involves cryptocurrencies.
Meanwhile, regarding the ongoing ban on digital currency in China, Tron’s founder, Justin Sun, has urged China to “step up” and revise its regulatory approach towards this financial sector.
Featured image created with DALL-E, Chart from TradingView
