Business

Erik Gibbs

$290 million lost in crypto mining scam in China

Although the cryptocurrency community has wisened up, for the most part, to scams, there will always be one or two entities that are able to slip through the cracks. In many instances, such as with OnMiners and Mr. Zhang, the scams initiate in China and hopefully the Chinese will begin to see through the schemes. One recent incident involves a company that was reportedly selling mining hardware and was able to sell around $290 million in goods. However, it was all a big lie.

Liaxin Tech sold over 300,000 mining rigs in four months. It promised its customers incredible returns and fast profits and that each rig was capable of mining 47 coins each day. The coins being offered were Filecoin and CAI coin, and Liaxin promised that it wouldn’t take more than two months to begin to see returns. At a cost of around $843 per rig, it was too enticing a proposition for many to refuse.

CAI has seen strong market performance on the AT exchange, a point that Liaxin was proud to point out to its potential customers. There was just one problem, though. While the AT exchange publicly showed increases in value on a regular basis, the exchange belonged to—drum roll, please—Liaxin Tech.

Liaxin also chose a name that would give it a little more legitimacy in China. It called itself Shenzhen Bitmain Tech, hoping to provide the appearance that it was tied to Bitmain. It never publicly made such claims, instead, allowing imaginations do all the work.

The whole scam began to fall apart after one of Liaxin’s investors—and customer—noticed something odd. Only identified by the name Zhao, he discovered that his mining rig wasn’t working, yet the CAI token was still being created.

Zhao contacted the authorities, but it might already be too late. The scammers have already gotten away with around $290 million. If they’re still in China, though, there’s a chance they could be caught as police have suspended their passports, making it difficult to leave the country. However, any delay in suspension could have given them time to buy their way out of the country.

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