Singaporean investors have recently experienced a notable crypto scheme that resulted in the siphoning of their assets, totaling roughly $1.1 million.

This scheme, which was a fraud all along, highlights the risks associated with investing in seemingly lucrative cryptocurrency ventures.

The Misuse OF Tech And Crypto Investor Loss

According to the latest report from Channel News Asia (CNA), the chief technology officer of a “notorious” cryptocurrency investment firm was sentenced to five years in prison for his role in orchestrating a fraudulent scheme that duped investors out of $1.1 million.

The company, founded by the “once-celebrated” Chinese entrepreneur Yang Bin, attracted considerable investment, amounting to $6.7 million, by falsely promising substantial returns through its “bespoke” cryptocurrency mining operation.

The company, A&A Blockchain Innovation, was established in April 2021, and it didn’t take long to unveil its Chain Mining Scheme. CNA reported that this scheme was marketed aggressively to local investors, promising a fixed daily return of 0.5% from cryptocurrency mining.

The operation claimed to have secured a deal to acquire a majority stake in a fleet of 300,000 mining rigs in Yunnan, China, “purportedly” capable of mining high-value cryptocurrencies like Bitcoin and Ethereum.

However, the reality was different. A&A Blockchain Innovation had not entered into any such agreements or possessed any mining equipment. Rather, the firm was running a “classic Ponzi scheme,” relying on funds from new investors to pay returns to earlier ones.

This deceptive practice was further facilitated by a bespoke app developed under Wang Xinghong’s supervision, which was designed to manipulate data and mislead investors about the returns on their investments.

Legal Repercussions And Ongoing Investigations

Wang Xinghong, who played a pivotal role in developing the fraudulent app, according to CNA faced multiple charges of conspiring to cheat. The report read:

Wang was hired by Yang to develop the mining app. He knew there was no real mining, nor real returns being paid out. He developed the app as a centralised software where system managers based in China could input random numbers to falsely reflect investor returns. Wang was responsible for maintaining the app and managed a team of system managers in China. He admitted receiving about US$100,000 from his involvement.

Despite not masterminding the scheme, the report disclosed that his technical expertise was instrumental in perpetuating the fraud.

So far, Wang is set to spend “four to five years’ in jail, as suggested by the prosecution. However, his “Defence lawyers Adrian Wee and Lynette Chang from Lighthouse Law sought a jail term of three-and-a-half years and three years and 10 months instead,” CNA noted.

Meanwhile, the fallout from this scandal continues, with the police actively investigating the business activities of A&A and its associates.