SINGAPORE – He was the chief technological officer (CTO) of a firm offering a cryptocurrency investment scheme and which claimed that it had 300,000 physical mining machines that could “mine cryptocurrency” to generate revenue.
However, the company identified as A&A Blockchain Innovation did not have these machines and was, in fact, running a Ponzi scheme when it induced 12 investors to part with more than $1.8 million.
But in total, the prosecution said that between May 2021 and February 2022, A&A attracted investments from more than 700 investors in Singapore, amounting to around $6.7 million.
According to the Coinbase website, mining is the process that several cryptocurrencies use to generate new coins and verify new transactions.
Chinese national Wang Xinghong, 40, whom the prosecution described as a “key cog” in the investment scam, pleaded guilty to six cheating charges and was sentenced to five years’ jail on Aug 6.
He had told investigators that he received around US$100,000 (S$132,500) from his involvement in A&A.
Wang has made no restitution and the prosecution said that as A&A operated a money circulation scheme, some of the affected investors were paid returns using money from other investors.
Deputy Public Prosecutor Wong Shiau Yin told the court that the total loss suffered by the investors across Wang’s charges amounted to around $1.1 million.
The cases involving his alleged accomplices, including Dutch national Yang Bin, 61, and Chinese national Lu Huangbin, 60, are still pending.
At the time of Wang’s offences, Yang was the chairman and overall person in charge of A&A, while Lu was its chief executive.
DPP Wong said Yang incorporated A&A on April 20, 2021.
Between May 20, 2021, and Feb 15, 2022, it offered the “A&A chain mining scheme” to investors in Singapore.
Under this scheme, A&A promised investors a fixed daily return of 0.5 per cent on their investments, which would purportedly be derived from the mining of cryptocurrencies.
In its marketing materials to investors, which included presentation slides and promotional videos, A&A claimed that it had entered into an agreement with a firm called Yunnan Shun Ai Yun Xun Investment Holdings to acquire 70 per cent ownership of 300,000 mining machines in China, which could mine cryptocurrencies such as Bitcoin and Ethereum.
A&A also claimed that it would generate the revenue for returns through the mining of cryptocurrency by using these machines.
In addition, the company developed an app that investors could use to purchase A&A “tokens” to invest in the mining scheme.
More On This TopicInvestors could also monitor their purported 0.5 per cent daily returns through the app, the court heard.
DPP Wong said: “In reality, A&A did not enter into an agreement with Yunnan Holdings to acquire 70 per cent ownership of 300,000 mining machines. In fact, A&A did not mine cryptocurrency to generate revenue.
“Instead, A&A operated a money circulation, or Ponzi, scheme, using monies from later investors to pay returns owed to earlier investors.”
Yang managed to engage Wang to develop the app.
However, Wang was aware there was no real mining of cryptocurrency being done and no real returns were paid to investors.
Despite this, he developed the app, which was a centralised software where system managers based in China could input random numbers to falsely reflect investor returns.
The prosecutor said that Wang had central responsibility in maintaining the app and managed a team of China-based system managers.
Wang was also listed as the CTO in A&A marketing materials and had attended board of director meetings that the company had hosted.
Court documents did not disclose how his offences came to light, but he was later charged in court in 2023.
Wang was represented by lawyers Adrian Wee and Lynette Chang from Lighthouse Law, who said Yang used to be one of the richest people in China.
They pleaded for Wang to be given up to three years and 10 months’ jail, adding: “Our client did not conceptualise the cryptocurrency investment scheme.
“He also did not have any roles in the marketing of the scheme to investors or the making of false representations for the purposes of obtaining investment monies. Save for the development of the app, our client had no role in the operations of (A&A).”
For each count of cheating, an offender can be jailed for up to 10 years and fined.