Chinese Bitcoin Exchange Scams $4.1 Million

November 13, 2024         By: Kevin Xu

Bitcoin has been surging, and much of the momentum is due to the increasing fervor of Chinese bitcoin enthusiasts.

There has also been an increase in the number of bitcoin exchanges cropping up, which can be seen as a trading platform where those who have bitcoins can trade them for real currency and vice versa. However, not all of them can be trusted, as users of one Chinese bitcoin exchange can certainly attest to after they had been scammed of their holdings.

Global Bond Limited (GBL), a bitcoin exchange, claimed to be headquartered in Hong Kong. In reality, the six-month old exchange had its servers in Beijing and was never registered to provide financial services.

GBL attracted more than 1,000 investors in a six-month span. These were the same investors who put in $4.1 million worth of bitcoins in the exchange.

All of this occurred despite some shadiness, which included a lack of contact information of the business owners, and in early October, GBL had capped the amount of money that its users could withdraw, perhaps to increase the take that the owners of GBL could run away with.

Some of the customers who were scammed reportedly visited GBL’s listed offices in Hong Kong and found them empty.

These are the digital currency’s days of growing pains. Just last week, hackers robbed the bitcoin-wallet provider Inputs.io of $1 million. While bitcoin skeptics may liken the currency and its developments to the Wild West, the same scrutiny and issues have occurred in recent past with other financial innovations.

Right now, the major bitcoin players must find a balance between upholding bitcoin’s founding principles (of being unregulated and decentralized) and accreditation - namely policies, procedures, and even legislation that should be in place to protect consumers.

In the meantime, it may not be the brightest idea to give just any new exchange or wallet provider your money or bitcoins.