- During a legal case proceeding, Yang Qichao, a 24-year-old Chinese college student, faced trial for defrauding someone of 50,000 USDT by removing liquidity from a BNBChain token he generated.
- He was given a 4-year and 6-month jail term sentence for perpetrating fraud involving virtual currency transactions.
- Yang’s lawyers argued that the BFF coin had a unique contract address that could not be changed, meaning it was not a counterfeit.
Let’s explore the news in detail below:
What Happened?
A Zhejiang University senior, Yang issued a token named Blockchain Future Force (BFF) on the Binance Chain in May 2022 as stated by the Paper. To back up the decentralized virtual currency transaction which is significant in the liquidity pool, he further added 630,000 BFF and 300,000 BSC-USD.
On the other hand, investor Luo purchased 85,316.72 BFF at 50,000 BSC-USD from a different person who was selling it at the same time as these events. When 24 seconds elapsed, Yang removed the liquidity from the system leading to a sharp drop in the value of BFF and thus money loss.
In November 2022, Yang was taken into custody by the police, following Luo’s report. On the one side, there was an argument that the accused created a BFF coin bearing similar names and promotional activities as another token, for which he was accused of deceiving investors. He was rumoured to have tied up to 300,000 USDT to net Luo’s 50,000 USDT, then moved out more than 350,000 USDT, involving Luo’s investment.
Yang’s Legal Reply
Yang’s lawyers argued that the BFF coin had a unique contract address that could not be changed, meaning it was not a counterfeit. They pointed out that both parties are experienced virtual currency investors who knew very well the risks they were taking. The other issue the defence team raised is about stopping liquidity provision being unethical though it is not against the law in their platform as well as Luo not having actually lost money because the BFF coins were appreciated later.
What’s Ahead?
This case represents the first instance where criminal fraud has been proven through the issuance of virtual currency and withdrawal of liquidity. While virtual currencies were for the purpose of sentencing, in the eyes of this court, considered property, the law of China does not attribute any legal tender value to them. The matter before us highlights how complicated it is to handle virtual currencies within China’s legal system.
The result of the trial highlights integration complications in the cryptocurrency market when it comes to rule-making. However, with the growing phase in trading volumes of digital currency, there can be more cases like that of Yang where laws are more closely looked into and new laws are still being formed in order to protect people who buy these assets.
Also Read: 8 Best Crypto Wallets In The World | How To Protect Your Wallet?
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