Nine Chinese residents have been convicted by a local court in the country for executing a crypto scam that caused 66,800 Indians to lose $6 million in USDT. The incident is another proof of the risks of using cryptocurrencies without the necessary crypto education.
The court stated that the scheme deceived users into investing in its fake crypto platform (SENEE) by using false social media content, non-local servers, and fake identities. The people’s court in the Shandong province delivered the judgment.
Many crypto industry experts worry about the continued use of the USDT for financial crimes and the rising number of frauds targeting India. The experts believe India is the target because it has a sizeable crypto population.
Hence, it is no surprise that authorities in China are taking stricter measures to stop crypto-related scams that target non-Chinese residents but use the country as their base of operations.
Crypto Scam Operators Claim To Be Indians
According to the court document, He Moutian started the fraud operation in May 2023 by establishing an office in Heze, China. Then, he employed staff members and gave them specific roles to create an investment environment that looked real and one that intending investors could trust.
The staff claimed to be experienced investors, promising their victims monthly returns of between 8% and 15% on deposits of at least ₹1,000. They used translation apps for easy communication and to chat with their intended victims.
These staff members also had fake backstories and screenshots of their investments’ returns, which they showed to their intended investors. One of the staff members, Li Mouwang, confirmed that the SENEE app was a fake trading platform and that its documents, like licenses and business registrations, were all fake.
The team behind the app also freezes victims who deposit huge sums without any reason, preventing them from withdrawing any returns.
Money Laundering Through Crypto Exchanges
The crypto scam operators use traditional payment service providers to buy USDT, which they convert to US dollars or RMB. The court papers also revealed that the operators keep 15% of the stolen funds as commission.
The group moved the funds without a trace due to the anonymous nature of transactions offered by crypto networks and international payment platforms. However, Chinese law enforcement agents partnered with other agencies from India to identify the gang and bring them to justice.
Victims Receive Varying Prison Sentences Amid Judge’s Warnings
Based on the court’s judgment, each member was to pay a financial penalty and would be imprisoned for between 5 and 15 years. In the court’s official statement, the presiding judge warned the public to be careful of investing in online schemes with ‘classic’ red flags.
Such red flags include cashback offers, exceptionally high returns, and exclusive tips. The Chinese law enforcement agencies added that crypto scam operators who surrender voluntarily will receive a more lenient judgment under the country’s current criminal law.
Rising Crypto Scams in Hawaii Through Fake Friendships
In a related development, the Kauai police department (KPD) has issued a public warning to Hawaii following rising cases of crypto scams targeting the state’s older residents. In this crypto fraud scheme, the scammers initiate friendships or romantic interests in their potential victims before misleading them into investing in non-existent or fake schemes.
Described as the pig butchering scam, the KPD has warned residents to become more alert so they do not become victims. The law enforcement agency warned residents to be careful of accepting friendship or romantic requests from strangers or anyone pushing them to use unfamiliar online tools.
It also stated that residents should not discuss their financial status with anyone except their trusted family members. In addition, they must not send cryptocurrencies to anyone they’ve only met online, including social media apps.
The pig butchering crypto scam continues to rise in the USA. The Federal Bureau of Investigation (FBI) recently stated that a woman in Maryland lost $3 million to this type of crypto scam, with the scammers’ location still unknown.
