Chinese court sentences a group of crypto scammers to up to 15 years in prison

What’s new? The court of Heze County of the Chinese province of Shandong has sentenced a group of nine people for the realization of a cryptocurrency fraud scheme. From fake pages, Chinese residents conducted love correspondence with citizens of India and then persuaded victims to deposit funds on investment platforms at high interest.

Material by Guancha

What else is known? From June 1, 2023, to January 13, 2024, 66 800 Indians became victims of the scheme, and the amount of damage was about 40 million Chinese yuan ($5,6 million) in USDT stablecoins from Tether.

The tasks in the grouping were clearly divided. Various members were responsible for renting an office, purchasing servers, training employees, and developing strategies for working with victims, as well as creating fake investment platforms and maintaining a payment channel for withdrawing funds. Depending on their role in the criminal group, the participants received from five years to 14 years and 9 months in prison, as well as fines.

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The scammers posed as wealthy women from India looking for a relationship. To do so, they posted fake photos on social media from various locations around the world, fitness gyms, and restaurants.

To give the investment platforms the appearance of legitimacy, trademark registration certificates and licenses for non-banking financial activities, supposedly issued by the local regulator, were placed on their websites.

Such romantic scams are quite common in the crypto space, also known as Pig Butchering.

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In this scheme, attackers use social engineering to gain the trust of potential victims by imitating friendships or romantic relationships to then recommend investing in a controlled crypto platform in order to steal funds.

Back in 2022, the US Federal Trade Commission (FTC) noted an increase in crypto fraud on dating apps. The FBI later noted that from 2022 to 2023, the damage from such schemes increased by 53% to $3,94 billion.

In August 2023, Tether, which issues USDT, helped US authorities freeze 5 million coins involved in such schemes. In general, the company actively cooperates with regulators around the world to freeze illegal funds.

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As for the PRC, this is not the first such criminal proceedings in the country. Last year, for example, Google accused two of the country’s citizens of downloading 87 fraudulent crypto apps on Google Play and defrauding more than 100 000 users worldwide.