Student jailed for 4.5 years in China's first cryptocurrency fraud case

Yang Qichao, a university student, receives a 4-year and 6-month prison sentence for creating a cryptocurrency called Blockchain Future Force (BFF) on Binance's BNB Chain. The case, held at the People’s Court of Nanyang High-tech Industrial Development Zone in Henan Province, marks China's first criminal trial involving virtual currency issuance. Yang is also fined 30,000 yuan ($41,000).

Cryptocurrency Fraud: Legal Debates Surrounding Yang's BFF Case

In May 2022, Yang, a senior at a Zhejiang university, launched BFF. He allegedly injected liquidity into BFF, then withdrew funds, leading to a sharp decline in its value. Luo, an investor, claimed losses of 50,000 USDT (approximately 330,000 RMB).

Yang's defence lawyer argued that Luo, an experienced cryptocurrency trader, should have been aware of the risks. The lawyer suggested Luo had a clear understanding of the speculative nature of cryptocurrency investments.

The court debated whether cryptocurrencies are protected property under criminal law. It acknowledged that while cryptocurrencies lack currency attributes, they can be traded internationally, yielding economic benefits and exhibiting property characteristics. This influenced the sentence.

Legal Implications of Profitability: Examining Luo's Transactions in the BFF Case

The defence argued that Luo's transaction history indicated profitable trades, challenging the fraud claim. Despite Luo’s initial fraud claim, evidence suggested he benefited from the transactions.

This case has ignited discussions about the legal status and regulation of virtual currencies in China. The court's decision could set a precedent, shaping future legal proceedings in this field.

Yang Qichao receives a prison sentence for cryptocurrency fraud in China’s first such trial, highlighting regulatory ambiguities.