Tech lead jailed after Singapore investors lose S$1.1m to crypto firm started by Chinese tycoon

SINGAPORE: The chief technological officer of a company that drew S$6.7 million from investors in Singapore under a bogus cryptocurrency investment scheme was jailed for five years on Tuesday (Aug 6).

Wang Xinghong, a 40-year-old Chinese national, pleaded guilty to six charges of conspiring to cheat, with another seven charges considered in sentencing.

Investors in Singapore lost S$1.1 million (US$829,700) in what turned out to be a Ponzi scheme allegedly started by co-accused Yang Bin - listed by Forbes in 2001 as China's second-richest man.

The court heard that Yang incorporated A&A Blockchain Innovation in April 2021.

The company offered its Chain Mining Scheme to local investors, promising them a fixed daily return of 0.5 per cent on their investment, which would supposedly come from mining cryptocurrencies.

In marketing materials to investors, A&A claimed it had agreed with Yunnan Shun Ai Yun Xun Investment Holdings to acquire 70 per cent ownership of 300,000 mining machines in Yunnan, China.

These machines could purportedly mine cryptocurrency such as Bitcoin and Ethereum.

The company also developed an application that investors could use to buy tokens to invest in the mining scheme and monitor their daily returns.

In reality, A&A had entered into no such agreement with Yunnan Holdings, nor did it mine cryptocurrency to generate revenue.

Instead, it operated a money circulation or Ponzi scheme, using money from new investors to pay returns owed to earlier investors.

Wang was hired by Yang to develop the mining app. He knew there was no real mining, nor real returns being paid out.

He developed the app as a centralised software where system managers based in China could input random numbers to falsely reflect investor returns.

Wang was responsible for maintaining the app and managed a team of system managers in China. He admitted receiving about US$100,000 from his involvement.

Wang's charges involve a total of about S$1.8 million. 

The company drew investments of about S$6.7 million from more than 700 investors in Singapore between May 2021 and February 2022.

Wang did not make any restitution, although some investors were paid returns using money from later investors.

The police announced in February 2022 that they were investigating A&A's business activities for possible cheating offences.

The suspects - all Chinese nationals - were charged in court in August 2023.

The prosecution sought four to five years' jail for Wang, noting the significant harm caused in terms of financial losses, the 12 victims across Wang's charges and the key role he played.

Although he was not the mastermind, his actions were important in keeping up the ruse and lulling investors into a false sense of security that their investments were seeing returns, said the prosecution.

LEAST CULPABLE OF THE ACCUSED: DEFENCE

Defence lawyers Adrian Wee and Lynette Chang from Lighthouse Law sought a jail term of between three-and-a-half years and three years and 10 months instead.

Mr Wee said that when his client first met Yang, he was aware of Yang's reputation as a successful businessman.

Yang, a Chinese-Dutch businessman who is now remanded in Singapore, was formerly one of China's richest people.

When the pair first met, Yang told Wang that he was involved in a cryptocurrency mining business based in Dubai, said Mr Wee.

He said Yang later told Wang that he intended to start a new cryptocurrency mining business, with locations in China, Singapore and Kazakhstan.

He then hired Wang to develop an app that would allow investors to track their investments and daily returns, said the lawyer.

Yang purportedly instructed Wang to set up an office in Shenzhen and to recruit staff to develop the app, with all costs paid for by Yang.

Mr Wee said Yang instructed that the app should be designed such that values could be put in manually.

The lawyer said his client did not conceptualise the investment scheme, nor did he have any role in marketing it to investors or making false representations.

Mr Wee said Yang owed his client more than five months in unpaid fees, but Wang spent more than US$5,000 of his own money to maintain A&A's cloud server to allow police to retrieve key evidence.

He said the US$100,000 Wang received was simply payment for his services in developing the app and argued that Wang was "far less culpable than any of his co-accused".

Other than Yang, the other two co-accused are A&A CEO Lu Huangbin and Chen Wei, Yang's personal assistant and a director at A&A.

Their cases are pending.