Chinese Authorities Uncover Fraudulent Crypto Mining Scheme Worth Nearly $300 Million USD
Chinese authorities were able to uncover a fraudulent mining scheme that stole approximately $293 million from crypto users. As reported by the local news outlet 8BTC, a fake Chinese company called Lianxin Tech, sold more than 300,000 units of mining hardware to users in just a few months. Investors believed that they were going to make huge profits with these miners.
Crypto Mining Fraud Uncovered
There have been different cryptocurrency fraudulent schemes in the market in the last few years. One of them is related to crypto mining hardware. A Chinese company called Lianxin Tech was selling over 300,000 units of mining hardware to investors that were misled into thinking that they could make large sums of money with them.
The company said that users would be able to mine CAI coin and Filecoin. Two digital currencies that would have offered users the possibility to pay for their mining hardware in just a few days after starting the mining activities. This was very promising for users since miners tend to recover the funds some months after purchasing the hardware devices.
The CAI token was traded on a cryptocurrency exchange called AT and the price of this digital asset experienced an important price surge from 0.5 RMB to 1.4 RMB, reaching highs of 2 RMB. Thus, the price increase of this token could have increased the interest of users in purchasing the CAI mining hardware.
There is a recent report that shows that AT exchange was controlled by Lianzin Tech, the company involved in the crypto mining fraud. The company manipulated the price of the CAI token in order to attract users with the price increase of the digital asset. Additionally, the CEO of the company created another firm called Shenzhen Bitmain Tech, but it has nothing related to the Bitmain company that everyone knows for producing the most popular crypto miners in the market.
Additionally, the scammers were generating CAI tokens and the mining operations were not running. This is why an investor with surname Zhao said that the fraudsters were able to steal 2 billion RMB by that time. Users had just some metal machines that was worth just 600 RMB and they had to pay 5,800 RMB.
At the moment, the criminals had their passports invalidated and they were charged with fundraising and investment fraud.