He and others developed a

Decentralized virtual currency trading platform

However, after the platform passed the security audit

However, they launched another set of

Not passed security audit

Platform code with 'backdoor' function

……
After passing the security audit, they quietly launched another set of platform code with a 'backdoor' function. He and others used the 'backdoor' to manipulate platform data, replacing and transferring the virtual currency pledged by investors on the platform. In just two months, 103 investors lost virtual currency worth approximately 77.76 million yuan.
After the Yunmeng County Procuratorate filed public prosecution, in March of this year, the court sentenced He and three others to prison terms ranging from thirteen to three years for fraud, with fines ranging from 300,000 to 20,000 yuan respectively. He did not accept the first-instance judgment and appealed. Recently, the second-instance court made a ruling to dismiss the appeal and upheld the original judgment.
The pledged virtual currency has vanished
Mr. Tong has been engaged in blockchain-related work. In September 2020, he saw a friend promoting a new investment project, claiming that the project platform had deposit, withdrawal, borrowing, and repayment services. Users could deposit their virtual currency into the platform and receive returns regularly. The platform also issued a virtual currency called 'D Coin', which could be equivalently exchanged for users. Users could also borrow virtual currency from the platform. Mr. Tong was very interested and invested approximately 1 million yuan worth of virtual currency in the project platform.
On November 19, 2020, the project platform used 'D Coin' for pledging and quietly withdrew all the virtual currency Mr. Tong invested on the platform, leaving only a few million 'D Coins' of 'equivalent' value in the account. Subsequently, Mr. Tong found that the price of 'D Coin' had completely collapsed, dropping from originally worth tens of yuan to only a few cents.
On August 9, 2023, Mr. Tong reported the case to the Yunmeng County Public Security Bureau. After receiving the report, the Yunmeng County Public Security Bureau immediately launched an investigation. From September to October of the same year, four criminal suspects, He, Du, Li, and Ling, were successively arrested.
The investment platform has a 'backdoor'
"Virtual currency has the characteristics of anonymity and cross-border circulation, making it difficult to collect evidence during actual investigations." After the case was filed for investigation, the Yunmeng County Procuratorate intervened in accordance with the law, asking technical company professionals to explain the basic knowledge of virtual currency and related criminal methods to the case handlers, and held multiple consultations with the public security organs to assess the nature of the case.
Due to the situation where most investors' accounts are overseas, and it is difficult for victims to fully verify and trace the flow of transferred funds, the procuratorial organ and public security organ assessed that the key to collecting evidence lies in the data of the virtual currency transaction chain (referring to various data information involved from the initiation to the completion of the virtual currency transaction). Therefore, they focused on conducting investigation and evidence collection: on one hand, clarifying the criminal behavior patterns and participation levels of each actor; on the other hand, tracking the virtual currency circulation process, clarifying the virtual currency conversion process and the amount of crime. After detailed verification, the criminal facts of He and others gradually became clear.
In August 2017, He and Jia (another case) and others established a technology company. In July 2020, He and Jia designed and hired Du to develop a decentralized virtual currency trading platform (i.e., a platform where users can conduct cryptocurrency transactions without intermediaries). To gain the trust of investors, in September of the same year, He hired a professional project security assessment company to conduct a security audit of the platform and issued matching 'D Coin'.
However, after passing the security audit, He and others launched another set of platform code that had not passed the security audit and had a 'backdoor' function. Through the 'backdoor', He and others could arbitrarily modify the price of 'D Coin' on the platform and could replace 'D Coin' with the virtual currency invested by users without user consent.
To attract users, He let Li and others publish the project's security audit report and other materials for false propaganda online, causing multiple victims, including Mr. Tong, to believe it was true and invest large amounts of virtual currency with fair value (referring to the amount that would be exchanged between both parties willingly in a fair transaction).
From October to November 2020, He and Jia instructed Du and Ling to use the 'backdoor' function to increase the price of the platform's 'D Coin' by dozens of times in the early morning, and then exchanged their large amount of 'D Coin' for the virtual currency invested by users on the platform. After the exchange was completed, these virtual currencies were transferred to He's account. After the operation was completed, He and others lowered the price of 'D Coin', while users suffered huge losses because the virtual currency was trapped and could not be withdrawn. According to the appraisal, a total of 103 victims suffered losses through the operations of He and others, with the defrauded virtual currency amounting to over 77.76 million yuan.
From 'refusing to plead guilty' to 'pleading guilty and accepting the law'
On March 27, 2024, the public security organs transferred He, Du, Li, and Ling to the Yunmeng County Procuratorate for examination and prosecution.
"I am just a player, and I invested money in this project. I am not aware that the project can modify backend data." During the examination and prosecution period, He repeatedly refused to plead guilty when questioned by the prosecutor.
In response, the prosecutor focused on breaking through other criminal suspects such as Du, Li, and Ling, and specifically sought factual evidence of He’s criminal behavior. In addition, the procuratorial organ listed supplementary investigation outlines regarding investigation direction and evidence fixation, fully guiding the public security organs in investigation and evidence collection, and patiently explaining the law and reasoning to He, guiding him to face the legal consequences.
"You have records of logging in and transferring a virtual currency account on your phone. As long as you have the key, you control that account. How do you explain this? The virtual currency illegally obtained by Du and Ling has ultimately been transferred to your account. Were you completely unaware?" ... In the end, faced with solid evidence in the case, He admitted to his criminal facts.
The Yunmeng County Procuratorate, after examination, believes that the virtual currency obtained by He and others has value and exchange value, conforming to the characteristics of 'property' in criminal law. At the same time, in this case, He and others conducted false propaganda online to lure victims to invest, concealing the truth that the platform had a 'backdoor' and had a replacement function, and replaced the virtual currency with value attributes in investors' accounts, causing losses to investors. Their behavior is essentially to defraud others of property, thus He and others are suspected of fraud.
On September 6, 2024, the Yunmeng County Procuratorate filed public prosecution against He, Du, Li, and Ling for suspected fraud. On March 21 of this year, the court adopted all the criminal facts and sentencing recommendations put forward by the procuratorial organ and made the aforementioned judgment in accordance with the law. After the first-instance judgment, He appealed. Recently, the second-instance court ruled to dismiss the appeal and upheld the original judgment.

Follow me! Get more exciting content~