Yang Qichao, a college student in China has been sentenced to four years in prison for crimes relating to cryptocurrency scam. Yang bagged the jail term after participating in the issuance and withdrawal of a self-created token.
According to reports from the Chinese website, The Paper, the student was found guilty of cryptocurrency fraud after creating a virtual currency known as Blockchain Future Force (BFF) and then removing its liquidity consequently leading to a substantial loss of money for one of the investors.
Yang Qichao Issued BFF Tokens and Quickly Withdraw Funds
Per The Paper report, Yang discovered Blockchain Future Force, a decentralized autonomous organization (DAO) that was advertising the impending release of the community’s decentralized cryptocurrency, in May 2022. Intrigued, Yang decided to develop his cryptocurrency with a similar name on the BNB Chain and misleading investors.
On the same day, Yang launched the BFF token and increased liquidity by buying 630,000 BFF tokens with 300,000 BSC-USD. However, shortly after, Yang performed a liquidity withdrawal, removing all his added funds, thereby crashing the value of the token and resulting in significant losses for investors who had gotten involved with the project at the early stage.
Mr Luo, one of the victims lost about $50,000 after he exchanged the amount for a whopping 85,316.72 BFF tokens. After Yang’s withdrawal, Mr Luo’s investment fell to almost a fraction of his initial investment. Luo was able to track down Yang and made a demand for payment for his losses through a common acquaintance on WeChat. However, Yang refused to pay back which led to an official report to the police stating that he had been duped of more than 300,000 yuan (about $50,000).
Following the report, the police started an investigation for suspected crypto fraud. The aftermath of the investigation led to the arrest of Yang in November 2022. Yang Qichao was found guilty of fraud at first instance by the People’s Court of Nanyang High-tech Industrial Development Zone, Henan Province, on February 20, 2024. He was sentenced to 4 years and 6 months in prison as well as a fine of 30,000 yuan.
The case was held for a second trial on May 20. The defendant’s lawyer reiterated his clients’ innocence citing the volatile nature of crypto and the absence of a “fake cryptocurrency.” According to him, the cryptocurrency issued by Yang Qichao has a unique and unalterable contract address. He continued by stating that the defendant and the victim have a clear understanding of the nature and risks involved in investing in cryptocurrencies.
The lawyer added that the utilized blockchain platform allows for the addition and withdrawal of liquidity at any time and does not mean a violation of the platforms’ rule by the defendant. Ultimately, the lawyer stressed that the victim’s BFF coins gained value as a result of greater liquidity following the occurrence and that the victim wouldn’t lose anything if the transaction was swapped for more USDT coins than it was originally.
This proceeding marks the first of its kind in China, a country where cryptocurrencies and other virtual assets are not officially recognized.
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