A post-00 college student named Yang Qichao released a virtual currency called BFF on an overseas public chain, but his subsequent behavior caused legal disputes. On May 2, 2022, Yang Qichao issued a digital virtual currency called "Blockchain Future Force" (BFF for short) on the Binance Chain. Subsequently, he injected liquidity into this virtual currency in a short period of time, specifically 300,000 BSC-USD and 630,000 BFF.
At the same time that Yang Qichao injected liquidity, another investor Luo Mou exchanged 50,000 BSC-USD for 85,316.72 BFF coins. However, just 24 seconds later, Yang Qichao withdrew the liquidity and obtained a large amount of BSC-USD and BFF coins. This behavior caused the BFF coin to depreciate significantly in the liquidity pool, and Luo Mou could only exchange a very small amount of BSC-USD with the BFF coins he held.
Yang Qichao's behavior is legally defined as "withdrawal of investment." In the virtual currency trading circle, although this operation is regarded as a means of arbitrage, it can cause drastic fluctuations in virtual currency prices in the case of insufficient liquidity, causing huge losses to investors. Therefore, many traders believe that it is irresponsible for the issuer to withdraw quickly after adding liquidity.
Yang Qichao said that he was just "fighting back" against those who had "cut his leeks". However, on May 3, 2022, Luo reported to the High-tech Industrial Development Zone Branch of the Nanyang Public Security Bureau, claiming that he was defrauded of more than 300,000 yuan when investing in virtual currency. The police then filed a case against Yang Qichao on suspicion of fraud and arrested him in Hangzhou, Zhejiang.
In the second trial on May 20, 2024, Yang Qichao's defense lawyer insisted on defending his innocence. The lawyer pointed out that the virtual currency issued by Yang Qichao has a unique contract address and cannot be tampered with, so it does not belong to "fake currency". In addition, Yang Qichao and Luo are both senior virtual currency investors who clearly understand the risks of investment. The platform also allows investors to add or withdraw liquidity at any time, so Yang Qichao's behavior did not violate the platform rules. The lawyer also emphasized that the BFF coins held by Luo appreciated due to increased liquidity after the incident, and he did not actually suffer any losses.
In the context of the law not yet recognizing the legality of virtual currency, this case is the first in China.In the end, the procuratorate prosecuted Yang Qichao for fraud, believing that he issued false virtual currency and misled others to invest, and then quickly withdrew liquidity, causing losses to others. On February 20, 2024, the People's Court of Nanyang High-tech Industrial Development Zone, Henan Province, found Yang Qichao guilty of fraud at the first instance and sentenced him to 4 years and 6 months in prison and a fine of 30,000 yuan.
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