Tuesday, 26 May 2020

5 suspects indicted for violating Banking Act with virtual currency

Taichung District Prosecutors Office indicted five people Tuesday for violating the Banking Act after originally investigating them on suspicion of swindling investors out of money with a virtual currency they invented and touted as an improved version of Bitcoin, the world's most popular virtual currency.

According to the indictment, a 47-year-old man identified by the surname Wen (溫), from Taichung in central Taiwan, established a cyber technology company called Baote, with two Chinese nationals in Fuzhou, Fujian Province, China, in January 2016.

Wen, his two brothers, mother and a friend promoted and sold their invention -- a virtual currency named "Baote Coin (寶特幣)" -- in Taiwan and mainland China.

They bragged that Wen's company in China had huge assets and that Baote Coin was a better virtual currency than Bitcoin because it was an upgraded cryptocurrency emerging on the global market, prosecutors said.

Wen and his associates allegedly told potential investors that Baote Coin was distributed in only a limited volume and could be used to shop at more than 700,000 stores in Taiwan and to shop online and pay for taxi service in China, prosecutors said.

As a result of this sales pitch, Wen successfully persuaded eight investors to purchase Baote Coin from November 2015 to August 2016. In total, the investors paid Wen's company NT$23.81 million (US$768,700) and 1.77 million Chinese yuan (US$255,000).

The prosecutors said the Baote Coin investors did not realize they had been swindled until they could not use the virtual currency online.

The investors in Taiwan reported the case to the Criminal Investigation Bureau (CIB) in September 2017, which organized a special unit to investigate the case along with Taichung District Prosecutors Office.

In August, police arrested Wen's four Taiwanese associates after raiding several locations in Taichung, Taoyuan, Miaoli County and Tainan, while seizing evidence that indicated there were eight local investors and one from China.

Before the arrests in Taiwan, Wen and his Chinese associates were detained in China in March, according to the CIB.

Following Wen's recent deportation to Taiwan, the district prosecutors office indicted him and his four local associates on Tuesday, charging them with violating the Banking Act which stipulates only a bank can accept deposits, manage trust funds or public property under mandate or handle domestic or foreign remittances.

Any person found guilty of breaking the law is subjected to a penalty of up to 10 years in jail and a fine of between NT$10 million and NT$200 million.

source: focustaiwan.tw
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