Shanghai Police in China cracked a fraud case disguised under the guise of a "Coin Trading Master", where victims were induced to over-leverage their positions leading to liquidation.

BlockBeats News, October 24th, according to the Shanghai Prosecutor's Official Account, Shanghai public security authorities have arrested a fraud group disguised as a so-called "coin speculation master." This group had prearranged a collaboration with a related virtual currency investment and financial management platform, agreeing on a profit-sharing arrangement — collecting a commission based on the amount customers lost in platform investments. Driven by their interests, they launched a carefully planned fraud operation.

Some members were responsible for widely posting cheap virtual currency exchange posts on social media, forums, and other platforms, like casting a huge fishing net, waiting for those eager "fish" seeking wealth to take the bait. Once someone took the bait, another group of members would quickly swoop in, posing as "investment experts" to befriend the victims. They would first get close to the victims, build trust, and then send fake investment profit screenshots. Those seemingly real profit data acted as enticing bait, gradually lowering the victims' guard and making them unquestionably trust the fraudsters.

Finally, this group would induce the victims to leverage up their investments, use malicious market manipulation, and other means to cause the victims' invested virtual currency to "liquidate," allowing their money to flow into the pockets of the fraudsters like running water.

In March 2025, the Yangpu District Prosecutor's Office filed a public prosecution against Peng and eight others for fraud. From April to May 2025, the Yangpu District Court sentenced Peng and others to one to five years in prison for fraud and imposed fines.

The report pointed out that in our country, virtual currency does not have the same legal status as legal tender, and the act of investing and trading virtual currency is not legally protected. Although it has characteristics such as scarcity, anonymous transactions, and high price volatility, which can easily give people a sense of rapidly accumulating wealth, we must be clear that behind high returns often lurks significant risks.