China Police Makes Rug Pull-related Arrests Amid Total Crypto Ban

No less than 8 people have been arrested by China police in relation to a RMB 50 million ($7.8 million) rug pull. The announcement was made via the official WeChat account of local police department on January 14, with further confirmation that another RMB 6 million ($944,000) has also been frozen by the authorities.

China Police Apprehends Rug Pull Supects

Following several reports by victims and after a series of investigations by the Police from Chizhou city, Anhui province, three suspects have now been arrested from three different provinces: Hunan, Guangdong, and Sichuan.

The police also seized from these suspects, luxury cars and mansions that are worth “tens of millions” of dollars, and are believed to have been gotten from their illicit dealings and of course the funds made thereof.

However, information gathered from the investigations has now revealed how the suspects were able to pull off the rug pull. They (the suspects) were transferring funds from investors’ accounts to an “anonymous pool” without their consent. And, according to the post, it was from this pool that the funds were then laundered.

Interestingly, the entire project had already been scrutinized before. But even though it passed the security audit, new findings reveal that the founders had deployed different code that included a backdoor.

Suspects have since confessed to the crime, says the police.

Yet Another Justification For China’s Crypto Ban

China is one of the countries that has issued an outright ban on all forms of crypto-related activities including trading and mining. The country made the announcement in September, looking to curb activities that could potentially hurt retail investors and the economy. And situations like the one summed up in this article just goes to further prove why China may be maintaining such a strong stance as it concerns crypto.

In June 2021, a single investor lost his entire RMB 590,000 to a typical rug pull when the project owners moved the money, shut down the website, and went missing, says Chizhou police. According to the post, over RMB 50 million were lost in the scam.

Meanwhile, Chainalysis reports also confirm that approximately $2.8 billion was lost to rug pulls by investors in 2021 alone.

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Mayowa Adebajo is a fintech enthusiast with a decade long experience writing news stories and creating content generally. When he’s not writing, he’s either talking politics or discussing sports.