After falling victim to a cryptocurrency MLM scam, a group of Chinese investors attempted to recover their losses by creating their own fraud
Local Chinese authorities report they have arrested a group who launched a fake cryptocurrency investment program after themselves being defrauded by various crypto schemes.
An article published by the Bureau of Cybersecurity Supervision on the WeChat platform revealed that an investor known as Yang created a counterfeit investment program after losing more than 100,000 yuan (approximately $14,000) to a multi-level marketing cryptocurrency scheme.
Yang, in his forties, partnered with two other investors who had also been deceived in the crypto sector and together they released a bogus mobile app promoting a token called “Baiye Chain.” According to reports, the operation attracted more than 20 members from the Lianyungang, Yancheng, Huai’an and surrounding areas.
The scheme was quickly exposed after investors who discovered the deception reported Baiye Chain to the police. Following an investigation and a search of the company’s office, authorities arrested Yang and his associates; investigators say the group had already collected about 300,000 yuan (nearly $43,000) in proceeds.
Investigators found the app was connected to a third-party exchange. After members deposited funds into the exchange under the pretense of blockchain investment, no legitimate blockchain transactions occurred; instead, the funds were moved to a private account belonging to Yang. Police followed the money trail and arrested him shortly thereafter.
The report also states that a technology company based in Henan province knowingly assisted Yang in developing Baiye Chain, despite being aware that its purpose was to defraud investors. That company reportedly helped create the virtual currency mining software used in the scheme.
Based on those findings, police arrested key company figures identified in the article as Li and Hu, seizing their computers and mobile phones as part of the investigation.
Scams involving cryptocurrencies have increased as China rolls out pilot tests for its central bank digital currency (CBDC) across the country. A new tactic used by fraudsters is impersonating CBDC trial groups and promising high returns on initial investments, which often start around 10,000 yuan (about $1,430).
At the end of the WeChat post, cyber-police urged readers to remain cautious and critically evaluate cryptocurrency investment offers to avoid becoming victims of fraud.
Translated by Carolane de Palmas