Chinese College Student Scammed JD.com for 1.1 Million Yuan， Which Can be Prevented by Blockchain
March 8, a court in the central China province Hunan has sentenced the high-profile college students scam case. The prime culprit with the surname Wang now faces more than 10 years of imprisonment and 80,000 RMB ($11,900) for scamming Chinese online retail giant JD.com for 1.1 million RMB.
It was reported that Wang exploited an identification loophole in JD Finance’s virtual credit card service JD Baitiao, created multiple fake accounts to purchase electronic devices with Baitiao credit lines and resell them online for profits along with eight accomplices in 2017.
As e-commerce and internet finance develop at a rapid speed in China, people aren’t saving the way they used to in a country known for a high saving rate. China has lower credit card market penetration relative to many other economies, as thus, Multiple online financing services pop up due to market demand, including Alibaba’s Huabei and JD’s Baitiao. However, the emerging financial service also comes with risk.
The Baitiao scam is mainly caused by the loophole in their risk control process. Users were not required to go through the real-name registration procedure in 2017, and the manual intervention cannot detect the scam in such a huge database.
In this case, blockchain may be a solution to improve the security of the existing financial service platforms. JD Finance has launched the No.19 JD Baitiao Receivables Support Project on June 13, 2018. The firm has upgraded the blockchain underlying technology of its ABS (Asset-Backed Securities) cloud platform in order to optimize its underlying assets projects.
JD Baitiao ABS requires complicated management process for their massive assets data. The “Immutable Distributed Ledger” technology of blockchain may support the real-time settlement monitoring of the underlying asset of JD Baitiao, as well as the data of its cash flow.
The online financial service is another potential application scenario for large-scale blockchain adoption which may effectively solve the security problem for this booming industry.