Law enforcement authorities in China have recovered over $15 million in digital currency, alongside supercars valued at over $2 million, after uncovering a digital currency scam selling counterfeit tokens.
According to local press reports, the Ministry of Public Security said 10 individuals had been arrested in the city of Wenzhou in connection with the scheme.
The case is thought to be the first of its kind in China, with victims allegedly being scammed through smart contracts, which were used to generate fake tokens.
The authorities seized digital currency denominated in BTC, ETH and Tether (USDT) to the tune of $15 million, alongside a McLaren and a Ferrari. Police also took possession of high-end real estate owned by the operators of the scam.
The scam was brought to the attention of the authorities by a victim, known as Li, who joined a group called “Huobi Global Arbitrage HT Chinese Community” on the Telegram messaging app.
According to Li, the group promoted a blockchain smart contract which would generate a proprietary token, giving investors an 8% yield arbitrage opportunity. According to Li, the idea was the investors could generate the Huobi Tokens (HT), and sell them on for an instant profit.
“Simply put, you send one unit of ETH to a designated address, you will receive 60 HT. And then you can sell it to gain the difference.”
After sending 10 ETH to the Ethereum address provided, Li received fake tokens purporting to be 600 HT, which could not be resold as advertised. On receiving the tokens and realizing they were fake, Li reported the matter to police.
The scam is thought to have earned the perpetrators tens of thousands of ETH, with the help of over 10,000 fake accounts to dupe victims into believing the offer was genuine.
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