The first criminal case in China related to the issuance of cryptocurrency has attracted public attention with the sentence of 4 years and 6 months in prison for Yang Qichao, who was accused of issuing fake cryptocurrency. and “withdrawal of capital” caused investor Luo to lose 50,000 USDT. The case raises questions about the legality of cryptocurrency operations in China, the liability of issuers and the limits of investment in the volatile digital asset market.
Event's happenings
The case started in May 2022 when Yang Qichao, a university student, issued a cryptocurrency called BFF on BinanceChain. After Luo, a professional investor, invested 50,000 USDT in BFF, Yang Qichao withdrew a large amount of BFF, causing the coin's value to plummet and causing damage to Luo. Luo accused Yang Qichao of fraud and Yang Qichao was arrested in November 2022.
The case was heard at first instance on February 20, 2024, and the Nanyang High-Tech Industrial Development Zone People's Court found Yang Qichao guilty of fraud, sentenced him to 4 years and 6 months in prison and a fine of 30,000 Yuan. However, the appeal court hearing taking place on May 20, 2024 witnessed fierce debates about the legality of the case.
Legal controversies and lessons about risks in the cryptocurrency market
The prosecution accused Yang Qichao of creating a fake BFF coin for the purpose of defrauding, and also claimed that Yang Qichao lured Luo to invest in BFF by artificially adding liquidity, then quickly withdrawing capital, causing Luo damage.
However, the defense argues that BFF issued by Yang Qichao is a valid coin, has a unique contract address, and can be exchanged normally. The defense attorney also emphasized that Luo, a professional investor, must have clearly understood the risks of cryptocurrency operations and voluntarily invested in BFF.
The trial witnessed fierce arguments between the parties, revolving around a number of key points. First, the legality of cryptocurrencies in China is currently unclear. Legal policy has not recognized the legality of cryptocurrencies, making it difficult to resolve lawsuits related to digital assets. The defense attorney argued that this case was brought to court as a criminal case due to violating the law when withdrawing liquidity through the issuance of cryptocurrency.
Second, the liability of cryptocurrency issuers is also a controversial issue. Current law is unclear about the issuer's liability, especially when there is no obvious fraud. The case raises the question of whether liquidity withdrawals and losses resulting from currency speculation constitute fraud.
Third, the limits of cryptocurrency investment are also set in this case. The defense attorney argued that Luo was a high-level player and must have clearly understood the nature of the game and risks of cryptocurrency trading, and that the platform allows adding or withdrawing liquidity at any time and the behavior of The defendant did not violate the platform's rules.
Financial experts and lawyers gave mixed opinions on the case. Some experts believe that Yang Qichao's sudden withdrawal of liquidity and Luo's loss could be considered fraud, while others believe that Luo should be solely responsible for the investment decisions mine.
New precedent for the future of cryptocurrency in China
The Yang Qichao case could have a huge impact on cryptocurrency activity in China. This case could push the Chinese government to issue clearer legal regulations on cryptocurrencies, protecting the rights of both investors and issuers.
In addition, this case can also raise awareness about the risks of investing in cryptocurrency, helping investors better understand the market and make informed investment decisions. In addition, it cannot be ruled out that the Chinese government may strengthen supervision of cryptocurrency activities to prevent fraud and protect financial security.
The Yang Qichao case is not the first case related to cryptocurrency in China. In 2021, the Supreme People's Court issued "Guideline No. 199", which confirmed that using Bitcoin for payment violates state regulations on financial supervision.
However, the Yang Qichao case is the clearest demonstration of the legal challenges and potential risks of the cryptocurrency market. In the context of this new market growing increasingly, the promulgation of clear and transparent legal regulations will be necessary to protect the interests of investors and develop the market in a sustainable way.
