A Chinese student faces 4 year & 6 months of jail sentence over launching a crypto token
Yang Qichao, a college student born in the 2000s, issued a crypto token called $BFF on a popular crypto blockchain network BNB and was sentenced to 4 years and 6 months in prison for fraud. The case began when Yang created the $BFF token and added significant liquidity. Shortly after, he withdrew the liquidity, causing the value of BFF to plummet and resulting in a loss of 50,000 USDT for a victim named Luo.
The People’s Court of Nanyang High-tech Industrial Development Zone in Henan Province found Yang guilty of token price manipulation & fraud in Feb 2024.
Yang’s defence lawyers argued that the $BFF token had a unique and unalterable contract address, making it a legitimate cryptocurrency. They also stated that both Yang and Luo were experienced crypto traders who understood the risks involved in such crypto Defi transactions. Additionally, they contended that withdrawing liquidity was within platform rules and that the $BFF tokens held by Luo appreciated in value after the incident, implying no real loss if Luo could sell them for more USDT later.
This case is notable as it is the first case in China where the issuance of cryptocurrency and the withdrawal of liquidity have been treated as a criminal matter. The legal debate centred around whether Yang’s $BFF token was a counterfeit and whether Luo was misled into believing it was a different currency.
The prosecution claimed Yang’s actions were deceptive and intended to defraud Luo, while the defence lawyers maintained that Luo’s losses were due to the inherent risks of crypto trading and not fraud by Yang.
Luo sought compensation after discovering Yang through a mutual WeChat contact. When Yang refused to refund the losses, Luo reported the incident to the police, leading to Yang’s arrest in Nov 2022. The defence lawyer asserted that the rapid purchase and sale of $BFF token by Luo indicated his professional level in the crypto world and that he should have known the risks of such transactions.
The case highlights the legal and ethical complexities of virtual currency trading, especially in an environment where the legal status of cryptocurrencies is not illegal & banned by the country’s central bank in the middle of 2021.
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