China Cracks Down on Crypto Scams: Four Arrested in Major Fraud Bust

• China arrests four in Shaanxi for defrauding $56,800 in crypto despite strict bans, showing ongoing vulnerabilities.
• Crypto scam bust in China highlights flaws in enforcement, with suspects using false promises to lure victims.
• Justin Sun calls for China to rethink its crypto policies, believing a shift could benefit the global crypto industry.

Mainland China, which is well-known for taking a hard line on virtual currencies like Bitcoin, is still fighting fraud involving cryptocurrency. A cryptocurrency fraud scheme was been taken down by Shaanxi provincial law enforcement. 

Four people were taken into custody on July 31 as a result of the operation, according to Baidu. Wang was the victim of an alleged 410,000 Chinese yuan ($56,800) fraud by the suspects, despite China’s complete prohibition on cryptocurrency activity.

Details of the Investigation

Wang reported to the local police on July 16 that he had lost 410,000 RMB as a result of making an online bitcoin investment. He was lured into the investment through an application promoted by individuals he met online. 

The fraudsters claimed they had discovered a system loophole that guaranteed crypto profits. Following Wang’s complaint, the Criminal Investigation Bureau launched a thorough investigation.

Consequently, police identified the suspects through several visits and detailed investigations. On July 23, they arrested Zhai and Li in Zhengzhou City, Henan Province. They then took Wang and Li into custody in Kaifeng City, Henan Province, on July 25.

China’s Crypto Stance and Future Prospects

Furthermore, China is now among the nations that are the least accepting of cryptocurrencies worldwide. It has imposed several prohibitions on trading and mining, among other cryptocurrency-related activities.

Enacted in 2021, the most recent prohibition on Bitcoin affected almost all cryptocurrency transactions. An interdepartmental operation against cryptocurrency activity was launched by local authorities.

However, despite the bans, the Chinese government still allows individuals to hold cryptocurrency. Crypto is recognized as virtual property protected by law, and authorities protect local crypto investors. Chinese law enforcement has been actively uncovering illegal crypto operations.

 For instance, in December 2023, the Chinese State Administration of Foreign Exchange busted an underground bank using crypto for illegal exchange services. This scheme, which had over 1,000 bank accounts across 17 provinces, moved over 15.8 billion yuan ($2.2 billion).

Besides these enforcement actions, influential figures like Justin Sun, founder of Tron, advocate for a reassessment of China’s crypto policies. Sun believes that China’s re-engagement with crypto could benefit the global industry. He urged Chinese authorities to reconsider their stance, emphasizing the potential positive impact on the global crypto market.