Chinese Police Busted up a HT Arbitrage Scam with over $20 Million Illicit Money
Recently, Chinese police have cracked the first criminal case about blockchain “smart contract”. Since 2019, the scammer has illegally obtained tens of thousands of ETH from victims by using the fake HT (platform token of crypto exchange Huobi) smart contract.
According to local police in Wenzhou, a city in Zhejiang province in Southeastern China, they have arrested a gang of 10 suspects who had swindled over 100 million Chinese yuan (about $20 million) from more than 1300 victims in the country.
Mr. Li, one of the victims said that he joined a telegram group called “Huobi global arbitrage HT Chinese community”, in which the group leaders released some “arbitrage tutorials”. Many members in the group shared experience, said that they had made profits according to the “arbitrage tutorials”.
“Simply it is to transfer ETH to the account designated by the scammer, and the scammer will return 1:60 amount of HT, and the value-added part of HT after the exchange is the profit about 8%.”
Said Mr.Li, one of the victims. However, after he transferred 10 ETH (worth 12000 Chinese yuan) to the account provided by the group owner, the scammer returned 600 fake HT, then did Mr. Li realize that he had been cheated and immediately called the police.
After receiving the case, the police soon found that the traditional investigation methods are useless to deal with such new crimes.
The police found that there were dozens of chat groups with more than 13000 members, but more than 10000 accounts were not online all year-round. This is a zombie account applied by the suspected to set off the size of the group.
The scammer hired more than 100 foreign servers to conduct automatic program control. Such a strict organizational structure, coupled with high intelligent automatic program control makes the scammers feel safe until the police find them.
Prior to this, the website of Huobi global has issued several announcements, saying that Huobi has never launched the activity of “arbitrage”, and continuously issued risk tips to prevent various forms of fraud through channels such as letters and media in the app. In the process of arresting the scammers, Huobi also assisted the police with strong technical support for solving the case.