Foreign Investors Bear Losses as China Enforces Crypto Ban

The Guangdong Court in China has concluded a high-profile case involving a virtual currency "Rug Pull" scam, underscoring the growing international scrutiny of crypto fraud and the legal challenges facing foreign investors in China's tightly regulated market. The case centers on a $31 million Ponzi scheme orchestrated by Chinese national Liang Ai-Bing, whose arrest in Thailand in October 2025 marked a pivotal moment in a cross-border law enforcement operation. The scheme, dubbed FINTOCH, lured investors with promises of 1% daily returns and a fictitious link to investment giant Morgan Stanley, ultimately collapsing and leaving victims across Asia reeling, according to a CryptoNews report.

Liang, who operated from a luxury Bangkok residence, was apprehended after a coordinated effort between Thai and Chinese authorities. During the raid, police uncovered an unlicensed firearm, adding weapons charges to the financial fraud allegations. The operation, which spanned December 2022 to May 2023, exploited on-chain analytics to trace 31.6 million USDT in transactions, far exceeding the $14 million figure initially cited by Thai authorities, according to a PanewsLab report. The platform's fraudulent legitimacy was further bolstered by a fabricated CEO profile and a $4,645-per-month rental for its headquarters, highlighting the sophistication of modern crypto scams.

The case has broader implications for foreign investors, particularly after a parallel ruling by the Jiangsu High Court in a separate cryptocurrency dispute. A Singaporean investor who partnered with a Chinese citizen to fund the "MFA Blockchain" project lost 15.74 million yuan after the venture collapsed. The court invalidated the contract, citing Chinese law's prohibition of virtual currency investments as illegal financial activities. Despite the inclusion of an overseas arbitration clause, the court ruled that the agreement violated public order and good morals, leaving the investor to bear all losses. This decision reinforces China's stance that even international agreements involving crypto are unenforceable if they contravene domestic regulations.

The FINTOCH case and the Jiangsu ruling highlight the systemic risks for investors engaging in crypto projects linked to Chinese entities. Legal experts warn that foreign investors must conduct rigorous due diligence, including verifying compliance with China's stringent crypto laws and ensuring partners hold enforceable assets abroad. Meanwhile, cross-border cooperation between law enforcement agencies continues to intensify, with Thailand and China demonstrating a coordinated approach to dismantling transnational fraud networks.

As global regulators grapple with the complexities of digital assets, these cases underscore the need for robust legal frameworks to protect investors while navigating the murky waters of cross-border crypto crime.