• 19 June, 2024
News

Chinese Student Sentenced to 4.5 Years Prison for Cryptocurrency Fraud

In a landmark case, a 24-year-old Chinese college student named Yang Qichao has been sentenced to 4 years and 6 months in prison for fraud related to virtual currency. Yang issued a digital token called BFF on a public blockchain. His subsequent withdrawal of liquidity resulted in a significant financial loss for an investor named Luo, who lost 50,000 USDT.

Yang’s fraudulent activity began when he issued the BFF token and promoted it to potential investors. Luo, attracted by the opportunity, invested 50,000 USDT into the token. However, Yang quickly withdrew the liquidity, causing the token’s value to plummet and leaving Luo with substantial losses.

The High-tech Industrial Development Zone People’s Court in Nanyang, Henan Province, found Yang guilty on February 20, 2024. Besides the prison sentence, the court fined Yang 30,000 RMB. The prosecution argued that Yang’s actions were premeditated and aimed at defrauding investors.

In his defense, Yang’s legal representatives stated that the BFF token in question was not a counterfeit token. They stated that both Yang and Luo knew what virtual currency trading is and the risks that come with it. Also, the defense argued that the token had risen in value after the said incident. They contended that Luo could have mitigated his losses if he had sold the token at a later date.

The court, however, did not buy these arguments. It asserted that Yang’s action of pulling out liquidity within a short time made the investment fraudulent. This action directly resulted in Luo incurring a financial loss.

This case points out the legal risks that are linked with virtual currency trading in China. It also stated that virtual currency investments may not be legally backed, therefore, the investors may be at risk of incurring total loss.

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Adding to the complexity of the case, the Chinese government’s stance on cryptocurrencies has been Executive as of late. The People’s Bank of China and other regulatory authorities have put out multiple advisories regarding the dangers of investing in virtual currencies. This, therefore, provides a background to the general environment in which Yang’s case was judged.

The case of Yang Qichao illustrates the dire effects of fraud in the fast-growing cryptocurrency industry. Due to the increasing adoption of digital currencies, the legal systems regulating them are also being enhanced to safeguard investors and sustain financial stability.

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