7000 BTC Loss in Bitcoin Exchange Scam in Hangzhou
Nearly 100 victims from various parts of the country reported to the Hangzhou police bureau, claiming that they were deceived by two young man named Zhou Yi and Li Xiang, who cheated nearly 7000 Bitcoins by exchanging or borrowing bitcoins .
Zhou Yi and Li Xiang had previously claimed on the Internet that they could exchange bitcoin as futures and provide interest. The victims trust them as previous orders were in small amount and they managed to deliver in time,. As they could offer bitcoin at price lower than market rate and delivery was stable, he soon collected order of several thousands.
Mr. Wang, one of the victims, said:
“I began OTC Bitcoin trading since 2017, unexpectedly I was cheated by more than 2 million yuan this year. As a senior bitcoin speculator, I always buy low and sell high, I trust my peers before”
But Mr Wang was not alone, as there were more than 100 victims. It is reported that more than 7,000 Bitcoins, equating 300 million yuan were involved in the case. The scale and the form of futures trading shook the whole bitcoin circle.
Bitcoin trade scam was conducted in two wechat groups, if someone want to buy bitcoin, he can negotiate by Weixin or QQ privately and transfer the money to the designated bank account after confirmation. One or two days later, Zhou Yi sent Bitcoin to the buyer’s designated bitcoin wallet, as victims were regular customs.
Mr. Zhang, one of the victims, said:
” I had been trading with them for more than a year. I first traded with them last summer and then bought bitcoins from them three times a week until they lost touch in April. The amount of each transaction is about two or three million yuan. In nearly a year, the volume of transactions has reached billions of yuan. Their price is very low. I earned nearly one million yuan before.”
Aside from trading bitcoin as futures, they borrowing bitcoins when promise interest. They gave 100-120 yuan/BTC to victims as interest, so 90% victims deposit their bitcoin in their account at ease. When victims pushed them for bitcoin release, they always transfer some money for compensation before they ran away.
Now Zhou Yi and Li Xiang were arrested for “illegal public deposit absorption” and the case is pending for further investigation. The most concern for victims is how to determine the nature of the case. The victims are not satisfied with the judgement “ illegal public deposit absorption”
“We just want to give the police more information to prove that they knew at the beginning of March that they couldn’t issue coins, and that the subsequent transactions were not only illegal public deposit absorption, but also a fraud.”
So, where is the legal boundary of OTC Bitcoin trading?
“It is legal to own bitcoins in China” says Sa Xiao, Council Member at Bank of China Law Research Association, cited by The Beijing News. Besides, Xiao considers occasional exchange of bitcoins between individuals and individuals is legal.
There are many OTC transactions based on Bitcoin in China such as futures and securities. Once disputes arise, investors will encounter the following difficulties: 1. legal evidence acquisition. Because online transactions are usually presented in the form of data and the evidence is difficult to fix; 2. Government’s negative attitude towards such transactions. If the investors participate in the transaction, they will probably have to bear the risks themselves.