Tech lead jailed after Singapore investors lose S$1.1m to crypto firm started by Chinese tycoon

Forbes recognized Yang Bin as China’s second-richest individual in 2001, and he founded A&A Blockchain Innovation. Over 700 investors in Singapore contributed S$6.7 million to the organization.

SINGAPORE: On Tuesday (Aug 6), the chief technological officer of a company that solicited S$6.7 million from investors in Singapore through a fraudulent cryptocurrency investment scheme was sentenced to five years in prison.

Wang Xinghong, a 40-year-old Chinese national, pleaded guilty to six charges of conspiring to cheat, with another seven charges considered in sentencing.

Yang Bin, who Forbes listed as China’s second-richest individual in 2001, allegedly initiated a Ponzi scheme that cost investors in Singapore S$1.1 million (US$829,700).

A&A Blockchain Innovation was incorporated by Yang in April 2021, according to the court.

Local investors were promised a fixed daily return of 0.5 percent on their investment through the company’s Chain Mining Scheme, which was purportedly generated by the mining of cryptocurrencies.

Wang Xinghong, a 40-year-old Chinese national, pleaded guilty to six charges of conspiring to cheat, with another seven charges considered in sentencing.

In its marketing materials to investors, A&A alleged that it reached an agreement with Yunnan Shun Ai Yun Xun Investment Holdings to acquire 70% ownership of 300,000 mining machinery in Yunnan, China.

These devices are ostensibly capable of mining cryptocurrency, including Ethereum and Bitcoin, in sentencing.

The company also created an application that investors could use to purchase tokens for investment in the mining scheme and track their daily returns.

In reality, A&A did not engage in any such agreement with Yunnan Holdings, nor did it mine cryptocurrency to generate revenue.

Rather, it implemented a money circulation scheme, or Ponzi scheme, which involved the use of funds from new investors to satisfy the obligations of previous investors.

Yang employed Wang to create the mining application. He was cognizant of the absence of genuine mining or distribution of genuine returns.

He created the application as centralized software that allowed system administrators in China to input arbitrary numbers to create a fraudulent representation of investor returns.

Wang was responsible for the app’s maintenance and oversaw a team of Chinese system administrators. He acknowledged receiving approximately $100,000 as a result of his involvement.

The total amount of Wang’s penalties is approximately S$1.8 million.

Between May 2021 and February 2022, the organization attracted approximately S$6.7 million in investments from over 700 investors in Singapore.

Wang did not make any restitution, but some investors received returns using funds from subsequent investors.

In February 2022, the police disclosed that they were conducting an inquiry into A&A’s business operations in anticipation of potential fraud charges.

In August 2023, the perpetrators, who are all Chinese nationals, were indicted in court.

The prosecution sought a sentence of four to five years in prison for Wang, citing the substantial financial losses, the 12 victims affected by Wang’s offenses, and the critical role he played.

According to the prosecution, his actions were crucial in maintaining the deception and deceiving investors into believing that their investments were yielding returns, despite the fact that he was not the mastermind.

The most culpable of the accused: Defense

Defence lawyers Adrian Wee and Lynette Chang from Lighthouse Law sought a jail term of between three-and-a-half years and three years and 10 months instead.

Mr Wee said that when his client first met Yang, he was aware of Yang’s reputation as a successful businessman.

Yang, a Chinese-Dutch industrialist who is currently incarcerated in Singapore, was previously one of the wealthiest individuals in China.

When the pair first met, Yang told Wang that he was involved in a cryptocurrency mining business based in Dubai, said Mr Wee.

He said Yang later told Wang that he intended to start a new cryptocurrency mining business, with locations in China, Singapore and Kazakhstan.

He then hired Wang to develop an app that would allow investors to track their investments and daily returns, said the lawyer.

Yang purportedly instructed Wang to set up an office in Shenzhen and to recruit staff to develop the app, with all costs paid for by Yang.

Mr Wee said Yang instructed that the app should be designed such that values could be put in manually.

The lawyer said his client did not conceptualise the investment scheme, nor did he have any role in marketing it to investors or making false representations.

Mr. Wee said Yang owed his client more than five months in unpaid fees, but Wang spent more than $5,000 of his own money to maintain A&A’s cloud server to allow police to retrieve key evidence.a

He said the $100,000 Wang received was simply payment for his services in developing the app, arguing that Wang was “far less culpable than any of his co-accused.”

Other than Yang, the other two co-accused are A&A CEO Lu Huangbin and Chen Wei, Yang’s personal assistant and a director at A&A.

Their cases are pending.

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