Man takes big financial hit after unauthorized transfer made from his account.
By Yan Jie
It’s any consumer’s worst nightmare: money vanishing from an online account without a trace. For one Beijing man surnamed Li, that scenario was further compounded by the fact that the missing funds — then the equivalent of 697,760 yuan ($104,400) — were in the form of virtual currency, and that the company involved has been acquired by another.
Not surprisingly, Li is angry and seeking retribution through the courts. According to a statement from the Beijing Municipality Chaoyang District People’s Court on Sunday, Li is accusing Zhengzhou Bi Te Technology, the original operator of the digital currency trading platform involved, of failing to safeguard his account, and is seeking damages for the amount lost.
Virtual currencies continue to enjoy immense popularity in China, as investors continue to seek out financial products that offer the prospect of asset appreciation. The market leader is bitcoin, which can be traded on several exchanges in China, including www.btctrade.com. Chinese exchanges have accounted for 42 percent of all bitcoin transactions this year, according to an analysis performed for The New York Times by Chainalysis.
At the same time, digital currencies have fallen out of favor with regulators and with some Chinese authorities. In December 2013, China’s central bank ruled out the use of bitcoin — and its competitors — for general circulation as a market currency, defining it instead as a “special virtual product.”
Still, Chinese people had the right to participate in the trading of bitcoin and similar products, the same statement said, though it also pointed out the possibility that some investors could use bitcoin and other virtual currencies for illicit purposes, such as sending money overseas without going through proper foreign-exchange controls.
Li appears to have fallen victim to another kind of fraud. On Jan. 25, 2016, he discovered that 56,000 Global General Points (GGPs), a virtual currency similar to bitcoin, had been transferred to another account a day earlier without his knowledge.
On Jan. 28, Zhengzhou Bi Te Technology confirmed to Li that the sum had been transferred to a new account registered under the surname Liu. However, the company found the user had registered the account using fake identification. That person had then withdrawn the GGPs.
From its side, Zhengzhou Bi Te Technology has refused to take any responsibility. Founder Wang Mingchao told Sixth Tone that the transfer was as the result of a “normal” login. He added that the incident could have resulted from Li sharing his password with someone else.
Li has denied disclosing or leaking his password to a third party.
The digital currency platform in question was launched by Wang in August 2013, and operated through the website www.btc100.cn. It was sold to Beijing Bi Te Yi Bai Technology in April 2016, Qiu Pinggang, general manager of that company, told Sixth Tone.
Qiu said the dispute was between the Zhengzhou company and Li. “It’s unrelated to our company,” he added.
In addition to Li, other users had also filed complaints about GGP, Qiu said. On Aug. 18, Qiu halted trading in GGP, as Lu Yingjie, the man behind the issuance of GGP, was being sought by the police on fraud charges.
In China, online platforms for trading of bitcoin-like products have been increasingly held liable for illegal transfers. In July 2016, the Heilongjiang Province High People’s Court ruled that Beijing Le Ku Da Network Technology, which operates the www.okcoin.cn virtual currency platform, should pay damages amounting to 627,569 yuan to the victim in a fraud case.
The court ruled on the grounds that the Beijing company had failed to stop the criminals from using its trading platform to transfer stolen funds.
(Header image: TEK IMAGE/SCIENCE PHOTO LIBRARY/VCG)
