Fake Bitmain Company Defrauded 2 Billion Yuan by Selling Scamcoin Mining Machine
Chinese police has recently busted a crypto miner scam which defrauded thousands of victims of 2 billion yuan ($300 million) by selling scamcoin mining machines.
The self-claimed blockchain company Lianxin Tech reportedly sold more than 300,000 units of mining rigs to unsuspecting investors in 4 months, which amassed a total of 2 billion yuan (roughly $300 million) amid a climate of heightened enthusiasm on crypto investment.
Promoters claimed the company’s mining machine was profitable like the bitcoin mining rig ten years ago and could mine two cryptocurrencies – the company’s CAI token and well-recognized cryptocurrency Filecoin.
As it was advertised, a CAI mining machine, sold at 5,800 yuan, could be paid back within two months with a daily output of 47 CAI. Witnessing the CAI token increase from 0.5 yuan per coin to 1.4 yuan and later 2 yuan on the crypto exchange named AT, most investors bought hundreds of mining machines.
Assuming an investor had 100 mining machines, he could earn 294,000 yuan ($43,000) a month if the mined CAI token is sold at 1.4 yuan. But they didn’t know the exchange the token could be traded on was actually under the control of the same company and the price of the token thus could be easily manipulated.
To make it convincible, the CEO of the company even set up a company named Shenzhen Bitmain Tech Company, which actually has no relationship with the mining giant Bitmain (world’s dominant crypto mining hardware manufacturer).
Victims did not realize it was a scam until an investor surnamed Zhao found her mining rigs keep generating CAI during a power cut. By that time, the gang of the fraud has run away with 2 billion yuan, leaving investors a stack of metal scrap which was purchased at 5,800 yuan but actually cost only 600 yuan per unit in production, according to industry insiders.
Police in Henan has invalidated the passports of the mastermind Huo Dong and his accomplices with the allegation of fund-raising fraud, which means, they have officially been barred from leaving the country.
As previously reported by 8btc, the IPFS mining machine scam has been rampant in China, it seems scammers have updated their tricks by selling crypto mining machines which can be delivered to investors in real existence.