How Police seized $15 million & super cars from cryptocurrency scammers

China’s Ministry of Public Security, responsible for the country’s police organizations, said Wenzhou authorities arrested 10 people suspected of operating a fraudulent scheme. Apparently, multiple people were scammed using blockchain smart contracts to generate fake cryptocurrencies.

Chinese authorities confiscated multiple cryptocurrency units such as Bitcoin, Ethereum and Tether, worth approximately $15 million, in addition to seizing luxury sports cars, including a Ferrari and a McLaren.

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It all started when one of the victims notified the police of the fraud, operated through the Telegram messaging platform. A chat group called “Huobi Global Arbitrage HT Chinese Community” offered a smart blockchain contract for the generation of Huobi Tokens, a supposed cryptocurrency with which users could obtain an investment return of more than 8%.

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“Simply put, if a user sends an Ethereum (ETH) unit to the address indicated by this group, the alleged developers would return 60 Huobi Tokens (HT),” the victim declared. According to authorities’ reports, the value of an Ethereum unit is $227 USD, while the price of an HT is only $4 USD.  

For the victim who testified to the police, things got even worse. After sending 10 ETH to the indicated address, the user received back 600 HT which turned out to be fake, so they could not be used in cryptocurrency transactions.

Chinese authorities mention that the scammers created dozens of chat groups for this fraudulent campaign, in addition to employing thousands of fake accounts from alleged HT users. Researchers do not believe that the Huobi cryptocurrency exchange platform is directly involved in the scam.

So far the authorities have detected ten members of this operation, three of whom are designated as the main operators. The leaders of the scam led an ostentatious lifestyle, with grand mansions, luxury cars and other extravagances.

Police acknowledge that this crime is on the rise in China, but did not specify exactly how they located the suspects or what techniques they used to track blockchain transactions related to this scam.