In a groundbreaking case that has drawn significant attention in China, a college student named Yang Qichao has been sentenced to 4 years and 6 months in prison and fined 30,000 yuan ($41,000) for “fraudulently” issuing a cryptocurrency called BFF on the Binance’s BNB Chain.
The case, which took place at the People’s Court of Nanyang High-tech Industrial Development Zone in Henan Province, marks the first criminal trial in China involving the issuance of a virtual currency. The Asian country has strict regulations that prohibit people from participating in the issuance, trading, or investing in these assets.
Criminal Trial On Crypto Fraud
According to local media reports, the incident began in May 2022 when Yang Qichao, a senior student at a university in Zhejiang, created a digital virtual currency called “Blockchain Future Force” (BFF) on the Binance chain.
It is alleged that Yang Qichao injected liquidity into the currency and then withdrew the funds, causing the value of BFF coins to depreciate significantly. One individual, Luo, who purchased BFF coins, suffered losses of 50,000 of Tether’s USDT stablecoin (equivalent to approximately 330,000 RMB).
Yang Qichao’s defense lawyer argued that Luo, “an experienced participant” in cryptocurrency transactions, should have been aware of the risks involved.
The lawyer contended that Luo had a “clear understanding” of the speculative nature of crypto investments and acknowledged the industry’s lack of regulatory oversight.
The lawyer questioned whether Luo’s decision to exchange 50,000 USDT coins for BFF coins resulted from misjudgment, given that virtual currency transactions inherently carry investment risks.
Profitability Amidst Alleged Fraud
During the trial, the issue of whether virtual currencies should be considered protected property under criminal law was also debated.
Although cryptocurrencies do not possess currency attributes, the court acknowledged that they can be traded on international platforms, yielding economic benefits and demonstrating undeniable property characteristics.
As a result, the court recognized the conversion of the 50,000 USDT coins into the country’s official currency, the yuan, as “a relevant factor” in determining the sentence.
Furthermore, the defense lawyer highlighted that despite Luo’s initial claim of being defrauded, subsequent analysis of his transaction records revealed a series of rapid and profitable trades. This led to the argument that Luo had actually profited from the investment, thereby calling the notion of fraud into question.
Per the report, the case has sparked a broader discussion about the legal status and regulation of virtual currencies in China. With the country’s legal policies yet to fully recognize the legitimacy of virtual currencies, issues surrounding their issuance, trading, and protection remain ambiguous.
The outcome of this case may serve as a precedent for future legal proceedings involving virtual currencies, shaping the legal landscape in this emerging field.
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