China cracks down on crypto scammers, seizing $15m
Scammers used Telegram to lure victims with false promises of returning their investments with Huobi Tokens
The Chinese police have arrested a group of cryptocurrency scammers based in the city of Wenzhou. The local authorities successfully seized millions in real estate, luxury cars and cryptocurrency.
In addition, they also managed to seize roughly $14.31 million in cryptocurrencies from the group, who had been operating since 2019. The tokens that were retrieved included “tens of thousands” worth of Ether (ETH), Bitcoin (BTC) and Tether (USDT), as revealed by the head of marketing at HashKey Hub, Mo Li in a tweet.
Ten people who used fake Huobi tokens to run a cryptocurrency scam have also been arrested by the police. The local media has been televising it as the “first criminal case involving smart contracts” in China.
Local authorities started following the group’s activities when a civilian, known only as Li, made a complaint to the police in April. Li had joined a Telegram group called the “Huobi Global HT [huobi token] Arbitrage Chinese Community.”
Unbeknownst to Li, this group was operated by scammers who were posting as benevolent investors that wanted to share their fortunes from a lucky investment scheme.
The victims were told to send their cryptocurrencies to a fake Huobi wallet. They were incentivised by promises made by the scammers to send higher values of Huobi Token in return. However, victims then received fake links for the token.
“Simply put…transfer your ETH to the account designated by the other party, and the other party will return 60 HT. After exchanging, the HT value-added part is the money you make, the profit is around 8%,” Li explained to the police.
Authorities have discovered that the Telegram group has over 13,000 members; however, more than 10,000 of them appeared to be idle accounts, and some were found to be computer bots.
As of writing, the police have found that over 1,300 people have fallen victim to scammers.
Local authorities have made an increased effort to crack down on illegal economic activities in the past few months. Recently, law enforcement was reported to be detaining over the counter (OTC) crypto traders to speed up investigations. Zhao Dong, a well-known Chinese crypto OTC trader and co-founder of RenrenBit, a crypto lending platform, was held by the police in the city of Hangzhou for this purpose.
Zhao is reported to be “actively” helping the local police in their anti-fraud and anti-money laundering investigations.