Because of the lack of regulatory supervision and controls, the cryptocurrency room continues to see its fair share of illegal activities. A blockchain security company’s chief marketing officer was recently charged with embezzlement after attempting to use the government to secretly sell bitcoin.
According to a local media story, Blockchain protection firm Beosin has recently been the subject of a major controversy after its chief marketing officer, Gao Ziyang, was arrested and charged with embezzling state properties.
Ziyang allegedly used government funds to short Bitcoin (BTC) unsuccessfully, resulting in a major liquidation of over 300 million renminbi, or $45 million.
Beosin, also known as Lianan Tech, had a relationship with Chinese authorities and was assisting them in the investigation of fraudulent fundraising schemes. Beosin was in charge of storing and selling properties that were seized last year and later returned to the state treasury.
Rather than sell these properties, Gao opened a short position in late August, when Bitcoin was trading for $12,000, in the hopes of increasing the size of the positions for his own benefit.
The investigation’s lead investigators noted that documents from crypto exchange OKEx show the position started with 10x leverage, then increased to 100x before being liquidated. Beosin’s reputation as a blockchain security firm in China is currently in question.
Beosin isn’t the only company that’s been involved in such shady dealings recently. Last month, one of Cryptouniverse’s clients filed a lawsuit alleging that the company embezzled his crypto mining equipment as well as his mined coins worth 25 million rubles ($340,000).
Prior to that, a San Francisco man was sentenced to prison and ordered to pay $4.4 million in restitution for committing an ICO scam. After posing as an ICO specialist and advisor, the accused embezzled both client funds and cryptocurrency.
Despite these practices, crypto crimes have been confirmed to have decreased dramatically in recent years. According to a study by blockchain intelligence company Chainalysis, the revenue produced by crypto crimes is expected to drop by more than $5 billion by 2020.