Shanghai Court Sentences Fraudsters in AI-Driven Digital Collectibles Case

The Shanghai First Intermediate People’s Court has sentenced defendants Wang and Liu for fraudulent fundraising through AI-generated digital collectibles, marking a significant regulatory action.

This case underscores growing regulatory scrutiny on digital asset platforms, particularly those using AI, with implications for platform legality and investor protections.

Shifting Regulatory Landscape for Digital Assets in China

Shanghai’s First Intermediate People’s Court found defendants Wang and Liu guilty of fund-raising fraud in a case involving AI-generated digital collectibles. Operating under a digital collectibles platform, they promised a “50% off” guaranteed return. These actions resulted in heavy sentences: eight years and six months for Wang and seven years and two months for Liu.

The sentencing emphasizes the importance of compliance in digital asset operations. Notably, the court’s decision increases industry awareness on fraudulent activities related to blockchain technology.

“Trading platforms must obtain legal business qualifications prior to operating… most current digital collectibles transfer platforms lack proper licenses,” stated Judge Gu Pingzhou, Presiding Judge, Shanghai First Intermediate People’s Court.

Market Impact and Future Compliance

Did you know? The Bigverse Case previously addressed digital collectible liabilities in China, debating whether digital goods equate to virtual property, highlighting regulatory challenges in rapidly evolving digital asset landscapes.

Ethereum currently holds a market cap of $542.21 billion with a trading price of $4,491.93, as per CoinMarketCap data on August 17, 2025. Despite the Shanghai incident, Ethereum shows a 1.66% price increase over 24 hours and a 26.86% rise over 30 days.

The Coincu research team notes a potential shift in investor sentiment due to increased regulatory measures. This scrutiny may drive stringent compliance across digital asset platforms, demanding a reevaluation of business operations within blockchain-based ventures.