- A Chinese crypto scam involving the minting of fake tokens has ended in the arrest of the perpetrators
- The scam is the first known occasion where a smart contract has been used to mint fake tokensInvestors thought they were buying Huobi Tokens at a reduced cost, but the tokens were fraudulent
- Investors thought they were buying Huobi Tokens at a reduced cost, but the tokens were fraudulent
The operators of a Chinese crypto scam that raked in some $15 million through a smart contract format have been arrested in the country. The creators of the ‘Huobi Global Arbitrage’ scam, which has nothing to do with the exchange, were arrested last week by police who recovered BTC, ETH, and USDT worth $15 million, alongside a McLaren and a Ferrari. The scam involved creating fake tokens via a smart contract, representing the first known such incident in the crypto scam world.
Crypto Scam USed Smart Contracts to Mint Fake HT Tokens
The Huobi Global Arbitrage crypto scam utilized smart contracts to create fake tokens and promised investors guaranteed returns on their investments. The crypto scam, which was conducted within a Telegram group dedicated to the enterprise, was reported to police by a victim, who explained how the scam worked.
The scammers promoted a blockchain smart contract which promised investors an 8% yield arbitrage opportunity. Investors would send ETH to a smart contract address which would generate Huobi Tokens, a legitimate token on the Huobi platform, which investors could sell on Huobi at a profit.
The victim confirmed that after sending over 10 ETH he received 600 HT tokens, which shows that the scam involved the creation and operation of a genuine smart contract. The victim found that he could not sell the HT tokens on Huobi and reported the matter to the authorities, which led to police discovering that the scammers had ‘earned’ tens of thousands of ETH during the crypto scam’s lifetime, with over 10,000 people scammed.
$15 Million Worth of Tokens Seized
The police raid, which took place in Wenzhou, a city on the country’s east coast, saw 10 individuals taken into custody and $15 million worth of digital currencies seized as well as a McLaren and a Ferrari.
While crypto scams are famously ten a penny and come in various shapes and sizes, this is the first known crypto scam to involve an actual smart contract creating fraudulent tokens for this purpose. It shows that scammers are turning to different means of stealing tokens, once again reinforcing the idea that if a scheme appears too good to be true then it usually is.