The Shanghai court in China has concluded a digital collectible fraud case, and the main culprit has been sentenced to eight and a half years in prison.
BlockBeats News, August 17th. According to the official WeChat account of the First Intermediate People's Court of Shanghai (Shanghai No. 1 Court), the court recently concluded a second-instance criminal case involving digital collectibles. The defendants Wang and Liu, under the guise of operating a digital collectibles platform, issued digital collectibles whose underlying electronic images were generated by AI, falsely promoting the appreciation prospects of the aforementioned digital collectibles and promising a "50% off" guaranteed return of principal. The court ruled that Wang and Liu were guilty of fund-raising fraud and sentenced them to eight years and six months, and seven years and two months of imprisonment, respectively.
In October to December 2023, Wang and Liu registered a technology company in Shanghai, focusing on a digital collectibles platform. During this period, Wang and Liu used the platform and WeChat groups to publicly promote the sale of digital collectibles to the general public. They released a total of 7,888 to 16,888 copies of the digital collectibles at prices ranging from 9.9 yuan to 69.9 yuan. By controlling the trading volume and price of secondary market collectibles through self-buying and selling, they created the illusion of active trading. When victims were unable to trade the collectibles and requested refunds, they would block the victims.
After trial, the Shanghai No. 1 Court held that the technology company involved in the case operated a digital collectibles platform without obtaining the necessary administrative license. The digital collectibles in question lacked support from cultural and artistic creation activities, and the selling prices deviated significantly from their value, violating market rules. The "on-chain services" provided by the platform also lacked significant value. Wang and Liu's actions were not essentially selling goods but deceiving victims of their investment under the guise of operating a digital collectibles platform, exhibiting characteristics of illegality, publicity, inducement, and social impact, and should be deemed as illegal fund-raising. In addition, Wang and Liu, with the aim of illegal possession, unlawfully raised funds using fraudulent means, with a substantial amount involved, constituting the crime of fund-raising fraud.
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