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Chinese police expose DeFi scam worth $7.8m arrest 8, suspects

DeFi

TL;DR Breakdown

  • Another DeFi Scam bursted by Chinese police.
  • How DeFi has become hot bed for crypto scams.

Chizhou police in the latest crackdown have unearthed a multi-million dollar DeFi rug pull, arresting eight suspects in the process.

Beijing’s crackdown on crypto continued with the start of the new year, as they froze almost $1m in crypto on suspicion of a scam. Local media in China reports that the public security bureau of Chizhou unearthed the crypto rug pull scam.

Investigation started after an investor lost nearly $1m worth of crypto in June last year. The trail of the inquiry led to eight people living in different provinces. The police also seized luxury cars, villas and other expensive items from the accused that were allegedly purchased using the stolen money.

The suspects lured investors with promises of high returns by swapping liquidity on their DeFi platform. However, after investors put in their money, the scammers laundered the money from anonymous pools and got away with all the funds.

“After the investigation and analysis by the police task force, it was found that this case was a typical case of illegally obtaining virtual currency by using blockchain technology,” Chizhou publicity Secretary revealed.

DeFi space, hotbed for rug pull scams

Rug pulls have become one of the most common scams in the DeFi space, as it is comparatively easier to pull off.

In their data, Crypto analytics provider, Chainalysis reveals that investors lost over $2.8 billion to rug pulls in 2021. These types of scams often offer investors lucrative returns, and once the pool has got enough capital, the scammers run away with all the money.

Chainalysis’ report said, “Rug pulls have emerged as the go-to scam of the DeFi ecosystem, accounting for 37% of all cryptocurrency scam revenue in 2021, versus just 1% in 2020.”

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Muhaimin Olowoporoku

Muhaimin Olowoporoku

Muhaimin loves writing on crypto news aside from being a crypto enthusiast. He has a knack for analysing issues and updating people on what's happening around the globe. He believes that blockchain and cryptocurrency are the most useful systems of mutual trust ever devised.

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