Living in mansions and driving Ferraris, involved in a case exceeding 100 million yuan: the "HT brick-moving" fraud gang was dismantled by Wenzhou police
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Living in mansions and driving Ferraris, involved in a case exceeding 100 million yuan: the "HT brick-moving" fraud gang was dismantled by Wenzhou police
Police in Ouhai, Wenzhou, Zhejiang Province have cracked the nation's first case of criminal activity using blockchain "smart contracts," dismantling two criminal operation sites.
Navigating Web3 tides with focused insightsOn July 9, according to information from the Cybersecurity Bureau of the Ministry of Public Security, recently, Wenzhou Ouhai police in Zhejiang Province cracked the nation's first case involving criminal use of blockchain "smart contracts," dismantling two criminal dens and arresting 10 suspects. Luxury vehicles including McLaren and Ferrari, as well as real estate properties, were seized, with the total value of the case exceeding 100 million yuan.
On April 8, 2020, the Ouhai Branch of Wenzhou Municipal Public Security Bureau in Zhejiang Province received a report from Mr. Li, a local resident. Mr. Li stated that he had joined a Telegram group named "HuobiGlobal HT Arbitrage & Profit Chinese Community," where the group administrator posted some "arbitrage tutorials." Many members actively shared their experiences, claiming they had already made profits by following the instructions.
Unbeknownst to him, this was merely a carefully disguised "pig-butchering" scam.
The scammers claimed that due to large market price fluctuations, there existed arbitrage opportunities for the same cryptocurrency across different exchanges. Users were instructed to send ETH from their imToken wallet to a smart contract address starting with 0xe5..., after which they would receive HT tokens at a 1:60 ratio. They could then deposit the obtained HT into an exchange, sell the excess ETH, and keep the proceeds as profit from one arbitrage transaction.
Some users found that when depositing small amounts of ETH initially, they actually received genuine HT tokens. However, as greed grew and larger amounts of ETH were deposited, they either stopped receiving any HT tokens or received counterfeit HT tokens with no trading value. By the time they realized they had been scammed, it was already too late.
In this case, when Mr. Li transferred 10 ETH worth 12,000 yuan to the account provided by the group admin, he received 600 fake HT tokens that could not be traded. Only then did Mr. Li realize he had been defrauded and immediately reported the crime.
During investigation, police discovered that most members within the chat group "HuobiGlobal HT Arbitrage & Profit Chinese Community" were shills whose task was to post false information and lure victims into the scam.
In June 2020, Ouhai police deployed elite cyber-security, criminal investigation, and local police forces, coordinating with Fuzhou City police in Fujian Province to conduct synchronized arrests. All 10 suspects were successfully apprehended at a luxury villa and another residential apartment in Cangshan District, Fuzhou City. Dozens of phones and computers used in the crimes were seized on site, along with tens of thousands of virtual currencies such as ETH, BTC, and USDT. Luxury vehicles including a McLaren-650S and a Ferrari-California T, as well as real estate properties, were confiscated or sealed, collectively valued at more than 13 million yuan.
After being captured, ringleaders Chen and others fully confessed to their criminal activities. Since 2019, the gang had illegally obtained tens of thousands of ETH from victims using fake HT "smart contracts." Police have verified information on over 1,300 victims nationwide, with the total涉案 amount surpassing 100 million yuan.
According to police, Chen, Yu, and Xu were university classmates who had recently graduated and entered society. Eager to make quick money, they turned to illicit schemes involving cryptocurrencies.
They recruited seven employees, conducted "job training" on computer and blockchain knowledge, and clearly assigned tasks such as registering blockchain wallet addresses, money laundering, communicating with victims, and daily management. Using their illicit gains, they frequented bars and nightclubs nightly, living year-round in high-end villas and presidential suites of luxury hotels.
Now, however, they face court trials and prison sentences.
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