Chinese Police Seize $14M in Crypto from Scammers Posing as Huobi Officials

The gang, which was made up of Chinese graduate classmates, operated by reaching out to victims through Telegram group chats, one of which was called “Huobi Global Moving Brick Arbitrage HT Chinese Group Community.” By posing as the global investment group and with the help of devised marketing schemes, the fraudsters advocated the use of “smart contract” blockchain technology in order to invest their “clients'" money. 

They claimed that the blockchain smart contract could generate Huobi Tokens (HT) - the official coin of the cryptocurrency exchange Huobi. The criminals told victims that this investment would enable the latter to earn an 8% return via arbitrage. 

The fraudsters convinced individuals to transfer Ethereum coins to a designated web address, after which the client would be compensated with 60 HT. They posed as investors and they told interested participants that all they needed to do was send their crypto coins to a fake Huobi wallet address, after which the victims would receive the promised HT tokens in return. Instead, it was reported that individuals falling for the scam only received a fake HT link in return. One victim came forward and filed a complaint to the local police. He told them: 

“Simply put, you send one unit of Ether to a designated account, and they send you 60 HT. If you sell it, the profit you gain is around 8%.” 

After investigating the criminal case for more than a month, Chinese police officers finally managed to locate the scammers. During their raid, officers arrested 10 suspects residing in a luxury villa and a commercial house in the Cangshan District of Fuzhou City. The police also seized real estate property, two luxury cars — a Ferrari and a McLaren — estimated to respectively be of $430,000 USD and $570,000 USD in value. 

Bitcoin and Ethereum win sentiment scores 

With cryptocurrencies on the rise, hackers and fraudsters have been quick to use this to their advantage. Ethereum, Litecoin, Bitcoins, and Zcash appear to be popular choices used in fraudulent activities. Though cryptocurrencies are relatively safe and secure, the guaranteed transparency of them can sometimes be problematic. 

A random sample population surveying whether people generally had a positive or negative outlook on cryptocurrencies found that Bitcoin and Ethereum generated the most positive outlooks, while Binance coin received the highest sentiment rate. Eleven cryptocurrencies were used in the experiment.