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China Police Detain Three in Bitcoin Fraud Case, Xinhua Says

By Bloomberg News
December 04, 2013 2:05 AM EST

Chinese police apprehended three people on suspicion of stealing money from investors through a fake online Bitcoin exchange, the official Xinhua News Agency reported, citing local authorities.

GBL, which began operating in May and had 4,493 registered users at the end of September, suddenly closed on Oct. 26, Xinhua said, citing police in Dongyang city in the eastern province of Zhejiang. One investor who reported the case to the police claimed a loss of 90,000 yuan ($14,774), Xinhua reported, saying the total amount of money stolen was unclear. The Hong Kong Standard reported on Nov. 11 that investors may have lost as much as 25 million yuan after the site closed.

The growth of Chinese investments in Bitcoin has come amid concerns that regulators may ban trading of the electronic currency. That was eased when deputy central bank governor Yi Gang was cited by the 21st Century Business Herald as saying last month that people were free to trade Bitcoin even as China refrains from recognizing it as a currency in the short term.

Bitcoin has gained in popularity in China, where a lack of investment options has contributed to a jump in speculative trading. The value of Bitcoin, which is not regulated by any country or banking authority, has soared 80-fold from a year ago and traded at $1,064 apiece at 12:14 p.m. in Shanghai on BitStamp, an Internet-based exchange where Bitcoins are traded for dollars, euros and other currencies.

The people detained in connection with the closure of the GBL exchange were captured in mid-November in the southern city of Shenzhen and the provinces of Anhui and Guizhou, Xinhua said.

To contact Bloomberg News staff for this story: Gregory Turk in Shanghai at gturk2@bloomberg.net

To contact the editor responsible for this story: Allen Wan at awan3@bloomberg.net

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