China is probing a 35 million yuan fraud case in Taizhou after authorities uncovered a metaverse-linked investment scheme that targeted more than 130 investors. Zhejiang police said suspects used facial recognition payment devices and fake virtual tokens to lure victims through staged returns and structured marketing promises, causing large-scale financial losses.
According to a local report, investigators said Wu, a Shanghai-based company representative, led the operation with accomplices from July 2020 to December 2021. The group marketed “facial recognition payment franchises” and promised investors reward points that could later convert into equity and profits, building what authorities described as a layered fraudulent investment structure.
Fraud structure and token manipulation
Wu and his network initially drew investors by charging franchise fees ranging from several thousand to tens of thousands of yuan. They also promised reward points per transaction and linked them to future IPO-style returns, creating the appearance of a legitimate tech expansion scheme.
The operation escalated when the group introduced a fake virtual currency called GDFC. They promoted it as a high-growth asset, although it had no real backing and functioned as a controlled “air coin” managed by the operators.
The group then manipulated token prices to simulate trading activity. Consequently, they restricted withdrawals and pushed investors to reinvest. They also encouraged continuous buying, arguing it was necessary to maintain token value.
Metaverse rebranding and financial losses
As GDFC was shutting down, due to lack of funds, the operators relabeled the investment plan as “Metaverse ME coins” and created a supposedly functional conversion process for compensation.
Furthermore, the change was presented as a restructuring tactic that urged participants to invest additional money. As such, several victims fell back into the same trap with hopes of financial recovery.
Nevertheless, forensic accounting confirmed that the majority of the money deposited by investors ended up in private bank accounts owned by the criminals. In addition, the money was traced to high-end shopping and property investments. The police detained the main suspect in March 2024, resulting in financial losses of more than 35 million yuan to over 130 victims.
Legal action and regulatory warning
Wu was arrested by the authorities, and he was sentenced by a Shanghai court to spend 10 years in jail, along with a 200,000 yuan penalty. Further, the court rejected his appeal and maintained the original decision, marking the closure of this case from the judicial perspective.
Amid this, the authorities have highlighted continued threats associated with investment fraud related to metaverse concepts. Investors are usually lured with a promise of a fixed income along with high profits and guaranteed returns. The case reiterates the need to do a thorough research before investing in any project and not get scammed by promotional and sophisticated business terms.
Also Read: Grinex Hack Gets Uglier: $13M Gone, and the Story Keeps Unraveling
