In a landmark case that has garnered significant attention in China, a university student named Yang Qichao has been sentenced to 4 years and 6 months in prison and fined 30,000 yuan ($41,000) for allegedly issuing a cryptocurrency named BFF on Binance's BNB Chain under fraudulent pretenses.

The trial, held at the People’s Court of Nanyang High-tech Industrial Development Zone in Henan Province, marks the first criminal prosecution in China related to the creation of a digital currency. China enforces strict regulations that prohibit individuals from engaging in the issuance, trading, or investment of such assets.

According to local reports, the incident unfolded in May 2022 when Yang Qichao, a senior student at a Zhejiang university, established a digital currency named "Blockchain Future Force" (BFF) on the Binance chain. It is alleged that Yang Qichao injected liquidity into the currency and subsequently withdrew the funds, causing a significant depreciation in the value of BFF coins. One individual, named Luo, who purchased BFF coins, incurred losses amounting to 50,000 Tether's USDT stablecoin (approximately 330,000 RMB).

Yang Qichao's defense lawyer argued that Luo, described as an experienced participant in cryptocurrency transactions, should have been aware of the associated risks. The lawyer contended that Luo possessed a clear understanding of the speculative nature of crypto investments and acknowledged the industry's lack of regulatory oversight. The defense questioned whether Luo's decision to exchange 50,000 USDT coins for BFF coins was a result of misjudgment, given the inherent investment risks associated with virtual currency transactions.

During the trial, the court debated whether virtual currencies should be deemed protected property under criminal law. Despite lacking traditional currency attributes, cryptocurrencies can be traded on international platforms, yielding economic benefits and displaying characteristics of property. Consequently, the court recognized the conversion of the 50,000 USDT coins into the yuan as a relevant factor in determining the sentence.

Furthermore, the defense highlighted that subsequent analysis of Luo's transaction records revealed a series of swift and profitable trades, casting doubt on the initial claim of fraud. This raised questions about whether Luo had actually profited from the investment, thereby challenging the notion of fraud.

The case has sparked broader discussions about the legal status and regulation of virtual currencies in China, as the country's legal framework has yet to fully recognize the legitimacy of such assets. The outcome of this case may set a precedent for future legal proceedings involving virtual currencies, shaping the legal landscape in this emerging field.