Fraudulent Withdrawal of Liquidity by Students Becomes First Prosecution in China

Bittime - A recent case in China highlights the legal risks associated with cryptocurrency market manipulation. Yang Qichao, a near-graduate student in Zhejiang Province, was sentenced to 4 years and 6 months in prison for fraud related to virtual token offerings.

The Scheme: Twin Token with Vanishing Action

According to TechFlow, Yang capitalized on the hype surrounding a decentralized autonomous organization ( DAO ) called District Future DAO. In May 2022, he created a token called “BFF,” identical in English characters to “District Future.” To create legitimacy, he added liquidity to the token pool by depositing USDT ( stablecoin ) and BFF tokens.

This is where the fraud is revealed. Soon after Yang established the liquidity pool, an investor named Luo purchased a large amount of BFF tokens with USDT. However, within seconds, Yang withdrew all liquidity from the pool.

This drastic maneuver rendered Luo's newly acquired BFF tokens nearly worthless, leading to significant financial losses.

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Seeking Justice and Facing Legal Consequences

Luo, aware of the fraudulent scheme, demanded compensation from Yang. After being rejected, Luo reported the incident to the police in May 2022, saying he was defrauded of more than 300,000 yuan (approximately $50,000 USD) through these virtual asset investments.

Authorities acted quickly. In November of the same year, Yang was arrested in Hangzhou, Zhejiang. The court found him guilty of fraud and imposed a substantial prison sentence and fine.

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Defense Arguments 

During the appeal process, Yang's lawyers attempted to defend his actions. He argued that virtual currencies have unique identifiers and are therefore not “fake.” Additionally, he emphasized that both parties are experienced cryptocurrency investors and understand the inherent risks involved.

Despite the defense's arguments, the court upheld the initial ruling. This case marks a watershed moment in China, being the first criminal prosecution related to the withdrawal of liquidity in virtual currency transactions.

Conclusion

Yang Qichao's case is an important reminder for investors and cryptocurrency market players. Fraud and market manipulation cannot be tolerated, and perpetrators will face strict legal consequences.

This case also shows that law enforcement in China is increasingly serious about dealing with cryptocurrency-related crimes. Investors should always be careful and conduct in-depth research before investing.

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How to Buy Crypto on Bittime

You can buy and sell crypto assets in an easy and safe way via  Bittime .  Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.

Monitor price chart movements  of Bitcoin (BTC) ,  Ethereum (ETH) ,  Solana (SOL)  and other cryptos to find out today's crypto market trends in real-time on Bittime.

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DISCLAIMER:  This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.