Singapore sends 51-year-old Chinese fraudster to jail over multi-million dollar crypto Ponzi scheme

SINGAPORE, Sept 11 — Chen Wei duped investors into handing over nearly S$1.8 million (RM5.98 million) with false claims that the firm he worked for was mining cryptocurrency in China and could thereby give them hefty returns.

In reality, however, A&A Blockchain Technology Innovation had not acquired 300,000 mining machines in Yunnan, China, as claimed, and did not mine cryptocurrency to generate revenue.

Instead, A&A operated a multi-million dollar money circulation or Ponzi scheme. The scheme relied on using monies from later investors to pay returns owed to earlier investors.

On Wednesday (September 11), Chen — a 51-year-old China national — pleaded guilty to six counts of cheating and one count of being employed without a valid work pass.

Chen was sentenced to four years’ jail and fined S$6,000.

Another eight charges were taken into consideration in sentencing.

His jail term was backdated to his date of arrest on Augsut 16 last year.

The Ponzi scheme’s mastermind, 61-year-old Dutch national Yang Bin, was earlier sentenced to a six-year jail term and a fine of S$16,000 on August 26.

Another co-accused, Wang Xinghong – A&A’s chief technological officer – was sentenced on August 6 this year to a jail term of five years.

Multi-million dollar Ponzi scheme

A&A was incorporated on April 20, 2021.

At the time of the offences, Chen worked as a director at A&A. He was also the personal assistant to Yang, who was A&A’s chairman then.

Between May 20, 2021 and February 15, 2022, A&A offered its “chain mining scheme” to investors in Singapore. The firm promised a fixed daily return of 0.5 per cent on their investment, which would come from mining cryptocurrencies.

In its marketing materials to investors, A&A said that it had entered into an agreement with another firm to acquire 70 per cent ownership of 300,000 mining machines in Yunnan, China. The machines could purportedly mine cryptocurrency such as Bitcoin and Ethereum.

However, none of this was true and to mask its ruse, A&A also developed an app which investors could use to buy “tokens” to invest in the mining scheme. Investors could also monitor their alleged 0.5 per cent daily returns via the app.

Chen had access to the app’s IT backend system, to authorise the withdrawal of Tether (USDT) stablecoin by investors, once Yang approved these withdrawals.

Investors could thus withdraw money from the scheme, which contributed to the illusion that the scheme was profitable.

Between May 2021 and February 2022, A&A attracted investments from over 700 local investors, amounting to around S$6.7 million.

The total amount involved across Chen’s charges is S$1,803,174.

Though Chen did not make any restitution, some of the investors were paid returns using money from later investors in the Ponzi scheme.

As such, the total loss suffered by investors across Chen’s charges amounted to around S$1.1 million.

Chen was first arrested on February 15, 2022, and released on bail the next day. Court documents did not state how the ruse came to light.

He was arrested a second time on August 16, 2023, and was remanded till August 31 the same year.

For cheating and thereby dishonestly inducing a deceived person to deliver property, Chen could have been jailed for up to 10 years, and fined.

For being employed without a valid work pass, Chen could have been jailed for up to two years, fined up to S$20,000, or both. — TODAY