Since October, more than ten cases of digital yuan fraud have occurred in various places, with a total amount involved exceeding 3 million yuan

Author: Nianqing, Chain Catcher

Since the first public test of the digital renminbi, a year has passed, and the application scenarios for the digital renminbi continue to expand. However, the country has not yet fully implemented digital currency. As a new form of payment, the digital renminbi has not reached a high level of popularity and remains in a stage where the public is aware of it but not familiar with its operation. Additionally, due to its anonymous management features, many scammers have begun to use the digital renminbi for fraud, making it difficult for law enforcement agencies to trace the flow of funds and to freeze accounts in a timely manner.

Recently, with the rising popularity of the digital renminbi, related fraud cases have also begun to occur frequently. According to incomplete statistics from Chain Catcher, since October, there have been at least a dozen cases of digital renminbi fraud across the country, with a total amount involved exceeding 3 million yuan. Recent scams mainly involve impersonating "public security and judicial authorities" and using "digital renminbi" wallets to transfer funds. For example:

On November 2, 2021, Ms. Liao (pseudonym) from Tianping Town, Guangxi, reported that she received a call from a stranger claiming to be from the Beijing Miyun Public Security Bureau, stating that she had opened a credit card in Beijing that was suspected of money laundering and needed to investigate all her bank accounts. Following the caller's instructions, Ms. Liao transferred her bank account funds to another bank card she had just opened and downloaded and registered the so-called "Security Guard" app. Subsequently, Ms. Liao operated according to the caller's instructions to activate the "digital currency" function and provided the SMS verification code to the caller. In the end, Ms. Liao was defrauded of a total of 370,000 yuan.

On November 4, a gentleman from Wujiang, Shaoguan, Guangdong, reported that between October 31 and November 4, 2021, he received a call impersonating the police, claiming he was involved in a case and required to prove his innocence. The scammer induced the victim to register for a digital renminbi app, sent a facial video to the scammer as instructed, and provided information such as the bank card verification code. The suspect used the facial video to bind the victim's bank card, recharged money into the digital renminbi app, and then transferred the funds from the victim's digital renminbi app wallet, resulting in a loss of over 1 million yuan.

On November 4, Mr. Li from Yingzhou Town, Lingshui, Hainan Province, fell victim to a scam impersonating public security and judicial authorities. The scammer claimed that the victim was suspected of money laundering and required him to "prove his innocence" by providing personal information, bank card numbers, etc. The scammer used social media platforms like QQ and Feishu to remotely control the victim's phone, opened a digital renminbi wallet for the victim, converted the funds in the victim's bank card to the digital wallet, and then transferred the "digital renminbi" to other digital wallets. The victim suffered a total loss of 120,000 yuan.

On November 6, Ms. Liu (pseudonym) from Teng County, Wuzhou, Guangxi, reported that she first received a call from a stranger claiming to be from the Wuzhou Public Security Bureau, stating that she was suspected of money laundering and needed to undergo a "police" investigation. The caller requested her to add them as a WeChat friend to cooperate with the "police" investigation. Following the caller's instructions, Ms. Liu added the so-called "officer" on WeChat, downloaded and registered apps like "Security Guard" and "Public Security Protection" from the links sent by the caller, and transferred all funds from her bank cards to the so-called "secure account" mentioned by the caller, repeatedly sending the mobile verification codes linked to her bank cards to the caller. In the end, Ms. Liu was defrauded of over 350,000 yuan.

In addition to fraud, there has also been a recent increase in criminal cases involving money laundering using digital renminbi. Criminals have targeted the strong privacy of digital renminbi payment transactions, making investigations more difficult, and have used digital renminbi for money laundering to evade law enforcement. For example, on November 4, the Public Security Bureau of Nanan City, Fujian Province, successfully cracked the first case of money laundering using digital renminbi in Fujian Province, arresting 9 gang members, with the amount involved exceeding 10 million yuan.

Regarding fraud and money laundering crimes using new methods like digital renminbi, senior research experts in the digital renminbi field explain that "controllable anonymity," as an important feature of digital renminbi, can protect the public's reasonable demand for anonymous transactions and personal information protection on one hand; on the other hand, it is also an objective need to prevent and combat money laundering, terrorist financing, tax evasion, and other illegal activities, thus maintaining financial security. However, the digital renminbi cannot completely eliminate similar financial crimes. Currently, the central bank has discovered that gray and black industries related to the digital renminbi have already caused losses exceeding several million yuan.

At the recent "Hong Kong FinTech Week 2021" event, Mu Changchun, director of the Central Bank Digital Currency Research Institute, also stated that due to the ease with which central bank digital currency can become a target for hackers, security is the primary task in system development, requiring a complete security and risk management mechanism. He introduced that throughout the entire operation cycle of the digital renminbi, the central bank will continuously improve the security management of the operating system, including aspects such as encryption algorithms, financial information security, data security, and business continuity. In the design and development process of the digital renminbi, combating money laundering, telecom fraud, and other illegal activities will always be prioritized.