$56 million! Two fraud cases under Bitcoin loan mechanism

According to Beijing news in China on the same day, about 20 Chinese traders have accused two Bitcoin online market makers of illegally collecting $56 million worth of Bitcoin under a loan mechanism.

The two online traders, Yi Zhou and Xiang Li, reportedly attracted nearly 100 traders by promising high returns on loan assets.
Currently, 20 victims have filed reports to the police in Hangzhou in mid-April.
In September 2017, the Chinese government banned the initial coin offering (ICO) in mainland China and stopped all virtual currency trading activities within its jurisdiction. China, once the largest country in virtual currency trading, now allows online digital asset trading.
In the report received by the police, Zhou and Li invited online traders to give the buying and selling prices of virtual currency transactions through the WeChat group. Before coming up with the idea of ​​the Bitcoin loan mechanism, the two of them had known the traders for nearly two years and gained mutual trust.
However, since April this year, the two have defaulted on interest payments with vague excuses, which has aroused investors' vigilance given that the two platforms are still continuing to accept deposits.
Both are currently being detained by police on charges of fraud.
Although limited to over-the-counter transactions, virtual currency trading still falls into a gray area. According to experts, Chinese law allows individual asset transfers, but if someone profits from the spread through virtual currency- based services, it may be considered fraud.

Meanwhile, China’s popular messaging app WeChat updated its policy last month to prohibit merchants from trading digital assets. (FX168)