Non-fungible tokens, also known as NFTs, have impacted the trading sphere in China for some time now. In July 2022, Wang from Hangzhou, a digital collection player, invested 299 yuan to purchase a NFT. The collection soon rose in value but when Wang returned to the platform, it had disappeared. After Wang revealed the incident, numerous other users reported facing the same issue. The platform quickly analyzed the server logs and found over 30 accounts associated with one IP address further into the platform, resulting in the resale of 21 NFT collections.

Upon investigation of the third-party platform involved with the resale, the records revealed the account registration information to match that of Chen. Chen was arrested soon after, and the 21 collections were returned to their original users. Beijing has been strict on cryptocurrencies and has labeled NFTs as digital collectibles, meaning purchases must be made using fiat money, such as the Chinese yuan. Customer complaints against NFTs have increased significantly in the last year, emphasizing the issues the market is facing.

In October 2022, a Hangzhou court ruling deemed Chen guilty and sentenced him to three years in prison for the crime of stealing the users' digital collections. Moreover, Chen was ordered to pay 50,000 yuan in compensation to all victims. The ruling furthers China’s tough attitude surrounding cryptocurrencies, sending a warning to users of the risks, and demonstrating their attempts to strengthen the NFT market and reduce criminal activities with NFTs.



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