A new type of fraud in the cryptocurrency circle; in just two months, 103 investors suffered losses equivalent to over 77.76 million yuan due to manipulation of the virtual currency trading platform.
Recently, the fraud case led by He and others has come to a conclusion—the second-instance court rejected the appeal of the main offender He, upheld the first-instance judgment, and the four defendants were sentenced to imprisonment ranging from 3 to 13 years, with fines from 20,000 to 300,000 yuan.
Investors' virtual currency 'vanished,' 'D Coin' collapsed, resulting in total loss.
Mr. Tong, engaged in blockchain work, was attracted in September 2020 by a virtual currency investment project: the platform claimed to provide deposit, withdrawal, borrowing, and repayment services, promising regular returns for deposited virtual currency, along with issuing 'D Coin' for equivalent exchange. Tempted, he invested virtual currency worth about 1 million yuan.
On November 19 of the same year, Mr. Tong discovered abnormal activity in his account: all the virtual currency he staked was exchanged for 'D Coin,' and the subsequent price of 'D Coin' plummeted from over ten yuan to a few cents, nearly worthless. He contacted the project leader, who falsely claimed that 'the backend was attacked by hackers,' then blocked Mr. Tong, disappearing completely. In August 2023, Mr. Tong reported to the Yunmeng County Public Security Bureau in Hubei Province, and the police gradually arrested four suspects: He, Du, Li, and Ling, from September to October of that year.
The platform hid a 'backdoor': changing the code after the audit, manipulating data to transfer assets.
During the investigation, the Yunmeng County Prosecutor's Office intervened early, collaborating with a tech company to clarify the logic of virtual currency crimes, and identified 'virtual currency trading chain data' as the core of evidence collection—both to clarify suspect behavior patterns and to track the flow of funds, gradually restoring the facts of the crime.
Backtracking to 2017, He and others established a technology company; in July 2020, He and others designed and hired Du to develop a 'decentralized virtual currency trading platform' (theoretically allowing trading without intermediaries). To gain trust, they hired a professional company for a security audit of the platform in September and issued 'D Coin'; however, after passing the audit, they quietly launched another un-audited code with a 'backdoor'—through this 'backdoor,' they could arbitrarily modify the price of 'D Coin' and exchange users' virtual currency without their consent.
Subsequently, Li and others spread false information online about passing the 'security audit,' attracting a large number of investors. From October to November 2020, He and Jia (handled in another case) instructed Du and Ling to use a 'backdoor' to raise the price of 'D Coin' dozens of times in the early morning, then exchanged a large amount of 'D Coin' they held for users' real virtual currency, transferring it to He's account; after completing the operation, they lowered the price of 'D Coin,' causing users' assets to be frozen and unable to withdraw. Statistics show that a total of 103 people were harmed, with losses equivalent to over 77.76 million yuan.
From 'refusing to plead guilty' to 'confessing without reservation,' the prosecution relied on evidence to establish the case.
In March 2024, when the case was transferred for review and prosecution, He continued to deny, claiming 'I am just a player, unaware that the backend data can be modified.' The prosecutor, on one hand, broke through with evidence from other suspects like Du, Li, and Ling to secure corroborating evidence; on the other hand, they listed supplementary investigation outlines to improve the evidence chain, while also explaining the law to He.
'Your phone has records of logging into and transferring out the virtual currency account; having the key means you have control, how do you explain that?' 'The illegally obtained virtual currency ultimately all transferred to your account, you really had no idea?' Faced with solid evidence, He finally confessed.
The Yunmeng County Prosecutor's Office reviewed and found that the virtual currency involved had value and exchange value, meeting the characteristics of 'property' under criminal law; He and others concealed the truth about the 'backdoor' through false advertising, causing losses by exchanging users' assets, which is essentially fraud. In September 2024, the prosecutor's office prosecuted four individuals for fraud.
In March 2025, the court accepted all charges and issued a first-instance judgment; after He appealed, the second-instance court recently ruled to reject the appeal, upholding the original judgment, marking the end of this virtual currency fraud case.