BlockBeats news, on July 25th, according to China Youth Network, after passing a security audit, another set of project codes with a "backdoor" was quietly launched. He and others used the "backdoor" to manipulate platform data and exchange and transfer virtual currencies pledged by investors on the platform. In just two months, 103 investors lost virtual currency worth approximately 77.76 million yuan.
After being prosecuted by the Yunmeng County Procuratorate in Hubei Province, China, in March of this year, the court sentenced He and four others to 13 to 3 years in prison for fraud in the first instance, and imposed fines ranging from 300000 to 20000 yuan each. He appealed against the first instance judgment. Recently, the second instance court made a ruling to reject the appeal and uphold the original verdict.
In August 2017, He and Jia (handled separately) established a technology company. In July 2020, He and Jia independently designed and hired Du to develop a decentralized virtual currency trading platform (a platform where users can trade cryptocurrencies without intermediaries). In order to gain the trust of investors, in September of the same year, He hired a professional project security evaluation company to conduct a security audit of the platform and issue a matching "D coin".
However, after the security audit passed, He and others went online and ran another set of platform code with a "backdoor" function that did not pass the security audit. Through the 'backdoor', He and others can freely modify the price of 'D coins' on the platform and exchange' D coins' with virtual currencies invested by users without their consent.
From October to November 2020, He and Jia instructed Du, Ling, and others to use the "backdoor" function in the early hours of the morning to raise the price of the platform's "D coins" several times, and then exchange their large holdings of "D coins" with virtual currencies invested by users on the platform. After the exchange is completed, these virtual currencies are transferred to He's account. After the operation was completed, He and others lowered the price of "D coins", while users suffered huge losses due to the virtual currency being withdrawn and unable to withdraw. After appraisal, through the operation of He and others, a total of 103 victims suffered losses, and the virtual currency defrauded was equivalent to more than 77.76 million yuan.
On September 6, 2024, the Yunmeng County Procuratorate prosecuted He, Du, Li, and Ling on suspicion of fraud. On March 21st of this year, the court adopted all the criminal facts and sentencing recommendations accused by the procuratorial organs and made the above judgment in accordance with the law. After the first instance verdict, He appealed. Recently, the second instance court ruled to reject the appeal and uphold the original verdict.
