Bitrabo Editorial
A significant case in China has come to a close as Yang Qichao, a college student, has been sentenced to 4 years and 6 months in prison, along with a fine of 30,000 yuan ($41,000), for the fraudulent issuance of a cryptocurrency named BFF on Binance’s BNB Chain.
The trial, held at the People’s Court of Nanyang High-tech Industrial Development Zone in Henan Province, stands as the country’s inaugural criminal prosecution involving virtual currency issuance. China strictly prohibits individuals from engaging in the issuance, trading, or investment of such assets.
Legal Proceedings Regarding Crypto Fraud
In May 2022, Yang Qichao, a senior student at a Zhejiang university, initiated the creation of a digital currency called “Blockchain Future Force” (BFF) on the Binance chain, as per local media sources. Allegations state that Qichao added liquidity to the currency, subsequently withdrawing the funds, leading to a significant devaluation of BFF coins. A buyer named Luo reportedly suffered losses amounting to 50,000 Tether’s USDT stablecoin (approximately 330,000 RMB) after purchasing BFF coins.
Qichao’s defense attorney argued that Luo, described as an experienced participant in cryptocurrency dealings, should have been cognizant of the risks involved. The attorney emphasized Luo’s awareness of the speculative nature of crypto investments and the sector’s lack of regulatory supervision. Questions were raised about whether Luo’s decision to swap 50,000 USDT coins for BFF coins stemmed from a misjudgment, given the inherent investment risks associated with virtual currency transactions.
Implications of Alleged Fraud on Profits
The trial also explored whether virtual currencies should hold protected property status under criminal law. Despite lacking currency attributes, the court acknowledged that cryptocurrencies can be traded on global platforms, yielding economic gains and demonstrating clear property characteristics. Consequently, converting the 50,000 USDT coins to the yuan was recognized as a pertinent factor in determining the sentencing.
Moreover, the defense attorney pointed out that despite Luo’s initial claim of being defrauded, a subsequent review of his transaction records revealed a string of swift and lucrative trades. This led to the argument that Luo had actually profited from the investment, casting doubt on the idea of fraud.
This case has ignited a broader discourse on the legal standing and regulation of virtual currencies in China. With existing legal frameworks yet to fully acknowledge the validity of virtual currencies, uncertainties persist concerning their issuance, trade, and safeguarding. The verdict may set a precedent for future legal actions in the realm of virtual currencies, molding the legal environment in this evolving domain.
Featured image from Shutterstock, chart from TradingView.com