According to local press reports, the Ministry of Public Security said ten individuals had been arrested, and over $15 million have been seized from a crypto scam that sold counterfeit tokens. Arrests were made in the city of Wenzhou in connection with the crypto scheme. The crypto scam is thought to be the first of its kind in the country, with victims allegedly being scammed through smart contracts, which were used to generate fake tokens. Chinese law enforcement agencies seized digital currency denominated in BTC, ETH, and Tether worth $15 million, alongside a McLaren and a Ferrari.
The operators of the scam sold fake token to victims.
The elaborate crypto scam was brought to the authorities’ attention by a victim, who joined a group called “Huobi Global Arbitrage HT Chinese Community” on the Telegram messaging app. According to him, the group promoted a blockchain smart contract, which would generate a proprietary token, and give investors an 8% yield arbitrage opportunity. According to Li, the idea of the scam was that investors could generate the Huobi Tokens (HT), and sell them on for an instant profit. The investor would send one unit of ETH to a designated address and would receive 60 HT. And then he can sell it to gain the difference.
The scammers managed to fraud out tens of thousands of ETH.
According to the victim Li, after sending 10 ETH to the Ethereum address provided, he received fake tokens purporting to be 600 HT, which could not be resold as advertised by alleged fraudsters. On receiving these tokens and realizing they were fake, Li reported the matter to the concerned authority. The alleged scam is thought to have earned the perpetrators tens of thousands of ethereum, with the help of over 10,000 fake accounts to dupe victims into believing the offer was genuine. Crypto scams all over the world have increased amid the ongoing global pandemic.