A man in China has been arrested for reportedly conning $15 million worth out of 50 investors after claiming he had a reliable supply of Bitcoin mining machines.
Defaulting on Orders
The suspect, surnamed Zhang, is from eastern China in the Anhui province. Zhang is in his 20s and is reported to have written in online posts that he had a reliable supply of Bitcoin mining machines. According to a report from the South China Morning Post, late last year saw high demand for these machines. This was due to increasing Bitcoin prices.
At the time, market values for a Bitcoin mining machine were around 30,000 yuan, or $4,600. However, the suspect was charging only 10,000 yuan, or $1,500. There was also the promise that they would be delivered two months after payment had been received.
Investors who may have initially been wary of the offer were put at ease when orders were being met. Yet, by mid-January, Zhang had defaulted on over 3,000 orders and was no longer operating his business. Police later determined that the suspect had purchased the Bitcoin mining machines at the market rate, incurring a loss of 20,000 yuan on each machine. He eventually turned himself in two months later.
It’s reported that he said he couldn’t continue his business due to prices rising on the machines.
Chinese Police Confiscate Mining Machines
News of this comes at a time when Chinese police have been active in seizing crypto mining machines.
Last week, it was reported that authorities had taken 200 computers used to mine cryptocurrencies such as Bitcoin and Ethereum. According to a report, the suspect, surnamed Ma, is alleged to have stolen 150,000 kW hours of electricity in more than one month.
The suspect was hoping to make some money through the operation. However, after discovering the daily electricity bill was 6,000 yuan, or $927, Ma is alleged to have short-circuited the electricity meter to avoid paying the bill.
In April, Chinese police also seized 600 Bitcoin mining machines following reports of irregular electricity use.
China was once a country home to a large number of crypto mining operators. But since China’s crackdown on the industry last September, many have relocated elsewhere. This, however, doesn’t appear to be stopping people from trading in the market however they can.
The People’s Bank of China (PBoC), China’s central bank, is keen to limit the market’s productivity in China. It’s reported to have said to a government internet finance group that the monetary authority can tell local governments to regulate the electricity consumption of Bitcoin miners to limit their production.
Do you think people will continue to mine in China despite a government crackdown? Let us know in the comments below.
Images courtesy of Shutterstock.