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Alleged Fraudster Arrested in China Over $15M Mining Hardware Con

When making investment decisions it is always important to remember the old saying, “If something looks too good to be true, it probably is.” This is especially true if anyone promises you a bitcoin mining rig, which people wait for months in advance, at just a third of the retail price.

Also Read: Silicon Valley Whales Buy Diamonds in the Millions With Bitcoin

The $15 Million Sting

Alleged Fraudster Arrested in China Over $15M Mining Hardware ConThe cryptocurrency market is usually hit with rather sophisticated cyber crimes like ransomware, hacking and malicious code injections. Still, good old fashioned methods of separating people from their money have not disappeared. A new example of this comes from China where a man allegedly made about $15 million by just appealing to people’s greed, promising mining hardware at a huge discount, and simply running away with the money.

Mr. Zhang, a resident of Anhui province in his twenties, has been arrested for allegedly defrauding almost 100 million yuan from fifty victims over a three month period, state media China Central Television (CCTV) reports. He took advantage of the insatiable demand for bitcoin in China at the tail end of 2017’s price rally and posted claims online that he can deliver mining rigs, that cost about 30,000 yuan at the time, for just 10,000 yuan. The delivery of the goods was promised two months after he got the money, but it never materialized.

Money Spent on Luxury Cars

Alleged Fraudster Arrested in China Over $15M Mining Hardware ConAccording to the report, Zhang gained the trust of his victims by appearing to deliver some of the mining machines for the discounted price. However, he didn’t really have a source for cheap rigs, and the Chinese police discovered later-on that they were actually bought for full price by him. Once people were convinced Zhang can really get discounted rigs, he received orders for thousands of them before vanishing in January.

The alleged conman surrendered to the police by his own volition after two months, claiming he was unable to deliver the promised rigs due to supply shortage and rising prices. He now awaits prosecution, but the money he received had already been spent on luxury cars as well as the rigs, according to CCTV.

Would you trust anyone that promises a mining rig at a third of the cost? Share your thoughts in the comments section below. 

Images courtesy of Shutterstock.

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Tags in this story
Arrest, Arrested, bitcoin sale, China, chinese, Fraud, Mining riges, N-Featured, Scam, sting
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Avi Mizrahi

Avi Mizrahi is an economist and entrepreneur who has been covering Bitcoin as a journalist since 2013. He has spoken about the promise of cryptocurrency and blockchain technology at numerous financial conferences around the world, from London to Hong-Kong.