Despite China’s strict ban on cryptocurrencies, crypto investment scams continue to surface. On July 31, 2024, local news agency Baidu reported that law enforcement in Shaanxi had dismantled a significant crypto fraud scheme, arresting four suspects.
Police bust major crypto scam in China
The victim, identified as Wang, was cheated out of 410,000 Chinese yuan ($56,800). Wang filed a complaint on July 16, explaining that he was duped into investing in cryptocurrency through an app by individuals he met online. These fraudsters claimed they had discovered a loophole guaranteeing crypto profits. Wang was convinced by their assurances and invested his money, only to realize later that it was a scam.
After receiving Wang’s complaint, the Criminal Investigation Bureau launched an investigation. Through several visits and detailed investigations, they managed to identify the suspects. On July 23, police arrested two of the suspects, Zhai and Li, in Zhengzhou City, Henan Province. Two days later, on July 25, they apprehended the other two suspects, also named Wang and Li, in Kaifeng City, Henan Province. All four suspects are now in custody, facing fraud charges as the investigation continues.
China is known for its strict stance on cryptocurrency, having imposed multiple bans on activities such as trading and mining. The most recent ban, enforced in 2021, effectively outlawed almost all crypto transactions. Despite this, the Chinese government permits the holding of cryptocurrency, recognizing it as virtual property protected by law. This means while trading and mining are illegal, individuals can still own and hold cryptocurrencies.
Illegal crypto activities in China
Chinese authorities remain vigilant in cracking down on illegal crypto activities. Law enforcement agencies across the country have been actively uncovering and dismantling various crypto-related fraud operations. For instance, in December 2023, the State Administration of Foreign Exchange uncovered an underground bank using crypto for illegal exchange services.
This extensive operation spanned 17 provinces and involved over 1,000 bank accounts. It moved 15.8 billion yuan ($2.2 billion) to buy crypto on overseas exchanges and provide yuan exchange services.
The crackdown on such activities highlights the ongoing risks associated with cryptocurrency investments, especially in jurisdictions with strict regulations. Investors are advised to exercise extreme caution and conduct thorough research before engaging in any crypto-related activities, even in countries where some aspects of cryptocurrency are permitted.
China’s ongoing efforts to crack down on crypto-related fraud highlight the persistent risks in the digital currency landscape, even in regions with stringent regulations. The situation in China serves as a reminder that while cryptocurrency can offer lucrative opportunities, it also comes with significant risks, particularly in environments where regulatory measures are stringent but not foolproof.