The main culprit of the 2 billion IPFS mining machine scam was escorted back to China from Cuba by Henan police

Compiled by Henan Police, China News Service, and The Conscience of the Cryptocurrency Circle.

On November 9, the Zhengzhou Municipal Public Security Bureau Zhengdong Branch's special task force escorted back to China the suspects Gao, Hu and Feng who were repatriated from Cuba for suspected fund-raising fraud. A reporter from Henan Business Daily learned that this was another major achievement of our province's public security organs in the "Fox Hunt 2019" special operation, and it was also the first time that our province's police repatriated and escorted fugitive economic crime suspects from Cuba.

In March this year, the Zhengdong Branch of the Zhengzhou Municipal Public Security Bureau opened an investigation into the "Henan Lianxin Technology Co., Ltd. suspected of fundraising fraud." After investigation, it was found that from October 2018 to February 2019, the criminal suspect Huo and others successively established and actually controlled Henan Lianxin Technology Co., Ltd., AT Exchange and other companies, using the hard drives, motherboards, and chassis they purchased and then labeled and assembled them to produce the so-called "mining machines" that can generate virtual currency.

Gao and others lied that customers could invest in "mining machines" to obtain high returns through mining, exchange, and trading. However, after customers paid a high price for "mining machines", the company froze the digital currencies exchanged by customers on the grounds that the trading platform was hacked, and prevented customers from withdrawing cash through the backend, in order to illegally occupy customers' funds. The funds involved in the case amounted to 1.36 billion yuan, and more than 7,000 people were victims. Police investigations found that the company's executives Gao, Hu, and Feng had fled abroad before the incident.

After Gao and others absconded, under the direct command of the Fox Hunting Operation Office of the Ministry of Public Security, the public security organs of Henan Province, Zhengzhou City, and Zhengdong New District set up a fugitive pursuit task force to carry out overseas pursuit work. Not long ago, the Cuban police arrested the criminal suspects Gao, Hu, and Feng, and immediately decided to repatriate them. After receiving the notification, under the unified organization and leadership of the Ministry of Public Security, the Zhengzhou police formed a working group to go to Cuba to escort the three people back to China.

The relevant person in charge of the public security organ said that the arrest of the three suspects in the case once again demonstrated the public security organ's determination to "pursue the fugitives no matter where they are" and also showed that the current cooperation between China's public security organs and the law enforcement departments of Latin American countries is more friendly and close. At the same time, the police urged other relevant persons involved in the case to surrender to the public security organs as soon as possible and strive for leniency.

Case review:

IPFS has always been very popular and has attracted the attention of many investors at home and abroad. Scammers have also discovered this and are taking advantage of the popularity of IPFS or using the name of IPFS to commit fraud.

Zhongyuan Silicon Valley, headed by Huo Dong, used this as a package to illegally defraud more than 2 billion yuan from October last year to February this year , and Huo Dong himself is suspected to have fled to North America.

Let’s take a look back at the entire scam.

One machine, two mining, invite you into a trap

Since October last year, Zhongyuan Silicon Valley has started selling mining machines, claiming that one machine can mine two currencies at the same time, and can produce both IPFS and CAI currencies. Compared with mining machines that can only mine filecoin, Snail Star's mining machines have a faster payback speed.

But in fact, this kind of dual-mining mining machine is not worth so much money. According to the mining machine configuration list provided by the victim, the veterans of the mining field said that the cost of this configuration of the machine is less than 1,000 yuan, and the worst thing is that the hard disk is only 1T.

In other words, apart from the 10% rebate given to the agent and the cost of 1,000 yuan, the net profit of this mining machine, which sells for 5,875 yuan, is about 4,000 yuan per unit.

This is what a real mining machine looks like.

Cut with the client

In order to develop downstream faster and improve performance, Zhongyuan Silicon Valley has also launched an agency mechanism.

Stimulated by the agency system, the number of participants grew rapidly, with investors from Henan, Anhui, Hubei, Jiangsu and other provinces participating, affecting thousands of people.

Each of these machines is priced at 5,875 yuan. You can become an agent by paying 100,000 yuan, and you can get 10% of the commission for each machine sold. According to agents, most of them have more machines in stock than they have customers.

It makes sense. People who are not optimistic about this project will naturally not buy mining machines. If they are optimistic about the project and buy mining machines, the price can be cheaper by becoming an agent, and they can also get commissions.

The sad thing is that these agents not only bought a large number of mining machines at the original price, but now they can’t even get a refund. But this is not the worst.

What’s worse is that there are still many investors who haven’t even received the mining machines.

Replacing concepts to reap investors

Zhongyuan Silicon Valley links together the concepts of blockchain, bit, mining, and IPFS, telling investors that mining is the safest and most reliable way to invest in digital assets. This is logically correct, but the problem lies in CAI, another currency that can be mined on one machine.

According to investors, the mining machines they bought for mining have nothing to do with this CAI, because this coin is transferred through the background, rather than a fixed output through the mining software algorithm.

It is also claimed that the more mining machines you have, the more coins you can get and the lower the cost.

The produced CAI coins can be traded and sold on the AT exchange, but poor investors don’t know this and this is another deep pit they have dug in advance.

The exchange is actually opened by itself

Before he ran away, the CAI of AT Exchange was rising steadily, and the daily buy orders were very strong. This also gave many investors strong confidence that they had found a good investment target and could make a fortune.

After that, the price of CAI continued to fall, but many people were still optimistic about it, so they rushed to buy at the bottom. As a result, the price of CAI continued to fall, trapping some people again.

The current AT Exchange (www.at3.com) is no longer accessible. We only found an announcement before the closure of the website. It said in a very old-fashioned way that it was attacked by hackers and that it would take three months to investigate. What does three months mean in the cryptocurrency world?

It means they can travel to any corner of the earth to enjoy life.

But the actual situation is that more than ten days after this announcement was issued, starting from February 27, a large-scale transfer of coins began.

According to insiders, the AT Exchange is also operated jointly by Huo Dong and Shao Wei's son.

After running away, he not only delayed, but also wanted to continue the fraud

After Huo Dong fled to North America, he continued to use some documents to give investors hope, in order to delay time and disrupt investors' thinking, and buy more time for himself.

First, it announced that it had conducted a roadshow in the United States and had been favored by Silicon Valley venture capital and capital, and that it would also carry out global operations.

After AT Exchange suspended services on February 14, it issued a document on February 17 stating that CAI had been acquired by a Silicon Valley company in the United States, and that it would repurchase CAI in the future in order to protect the interests of customers.

Then another document was issued saying that the server would be upgraded and the price of the server would be increased. What's funny is that there was a typo in this document, and "one machine dual mining" was written as "level one dual mining".

The latest document is also very funny, and it seems that they are trying to cheat investors again.

However, after in-depth research by investors, they found that this payment address was not Lamb's official address at all. It seems that Huo Dong will not stop until he squeezes every last drop of blood out of investors.

The police have opened a case, when will Huo Dong be brought to justice?

When victims from all over the country rushed to the Zhongyuan Silicon Valley office to seek an explanation, they found that the person in charge was no longer there. The victims actively visited various departments and achieved some results:

The Industrial and Commercial Bureau listed Huo Dong’s company on the list of abnormal operations.

The Public Security Bureau attaches great importance to this matter and has filed a case.

At the same time, Huo Dong was put on the blacklist of entry and exit restrictions.

Conclusion: The head of the public security organ said that the arrest of the three suspects in this case once again demonstrated the public security organ's determination to "pursue the fugitives wherever they are" and also showed that the current cooperation between China's public security organs and the law enforcement departments of Latin American countries is more friendly and close. At the same time, the police urged other suspects involved in the case to surrender to the public security organs as soon as possible and strive for leniency.

The above picture shows another project Hero Chain. The above fugitives are accomplices of Wang Dapao, a cryptocurrency scammer. It’s ok to hang around in the United States, but is it interesting to stay in places like Indonesia, Singapore, and India? You see, your accomplice Wang Dapao knew to surrender himself and seek leniency. Dear, come back and report Wang Dapao’s remaining crimes. Finally, he got a lighter sentence...