- Chinese College student Yang Qichao’s sentencing has led to a legal debate within the regulatory laws.
- Leading regulatory organizations of China released a notice on token issuance in 2017.
A student of Chinese Zhejiang University, Yang Qichao issued a virtual currency token BFF in 2022. After the issuance, Qichao’s uninformed liquidity withdrawal caused a crypto investor, Luo, to lose 50,000 BSC-USDT coins that he exchanged for the tokens.
This pushed Luo to file a complaint with the Nanyang Public Security Bureau. Presently, Qichao is facing a 4.5 year prison time and 30,000 Yuan fine being convicted for cryptocurrency fraud. The sentencing has raised legal concerns due to allegations of fraud surrounding its creation and trading activities.
Looking back, Yang Qichao, who had a notable interest in digital currencies, came across the DAO community Blockchain Future Force (BFF). Inspired by BFF, Qichao first issued the token on the BNB public chain in May 2022. He added a liquidity of 300K BSC-USD and 630K BFF during the issuance.
Immediately after the BFF coin went online, Luo spent 50,000 BSC-USD coins to buy 85,316.72 BFF tokens. Within the next 24 seconds, Yang Qichao withdrew the liquidity in the BSC-USD pair along with 507K BFF coins. In total, Qichao liquidated a notable 353K BSC-USD which led to Luo losing the 50K USDT coins used to buy BFF coins.
What is the Legal Defense Stating?
The case’s first sentencing happened on February 20, 2024. The Chinese student was sentenced to 4.5 years in prison along with a fine of 3,00,000 yuan as he was found guilty of fraud. Following this, the case included a second trial on May 24, 2024.
Moreover, the controversy arose because of a 2017 Chinese Regulatory law which the defense lawyer leaned on. The People’s Bank of China, the Ministry of Industry and Information Technology, along with three major regulatory commissions of China Banking, Securities, and Insurance issued the law.
The “Notice on Preventing the Risks of Token Issuance and Financing” states that token issuance is illegal in China and that risks must be borne by investors themselves. This raises a contradiction in the aforementioned sentencing of Yang Qichao.
Additionally, the prosecution also mentioned that Qichao’s BFF coin is a ‘fake’ coin. The defense lawyer optimized his client’s innocence by stating that virtual currencies bearing the same BFF name already existed before Qichao issued the token.
Furthermore, he stated that virtual currency platforms allow the issuance of multiple currencies with identical names but with unique contract addresses and liquidation at any time.
Meanwhile, the legal defense referred to the prosecution’s stating Luo’s ‘loss’ of money as incorrect. The lawyer stated that Luo made profits by trading back the virtual currency and stated Qichao’s innocence.
Additionally, the overall market has witnessed the report of multiple cryptocurrency frauds this year.
