Chinese police have seized 100 million yuan (~$15 million) worth of cryptocurrency from a group who allegedly sold fake tokens to would-be investors.
China’s Ministry of Public Security, the country’s principal police authority, announced the news on Thursday, saying that ten individuals are suspected of selling fake Huobi Tokens (HT) to over 1,300 people.
The group is said to have created “dozens” of Telegram chat groups, including the one named “Huobi Global Arbitrage HT Chinese Community,” where they advertised a blockchain smart contract that could generate HTs and provide an arbitrage opportunity to earn an 8% return.
“Simply put, you send one unit of ETH to a designated address, you will receive 60 HT. And then you can sell it to gain the difference,” a victim surnamed Li told the police.
However, when Li sent 10 ETHs to the Telegram group’s admin, the 600 HT they received in return were fake tokens, which could not be deposited for selling. It was when they reported the case to the police.
The police also seized two luxury vehicles — a Ferrari (worth about $430,000) and a McLaren (~$570,000) — and villas (~$1.15 million) from the group, led by individuals named Chen Mou, Yu Mou, and Xu Mou.
This is the first such criminal case involving smart contracts and fake tokens, the ministry said.