The man had “cleverly” blackmailed a company and managed to extort a large amount of the pseudonymous cryptocurrency. After trading the bitcoins for cash, the Chinese citizen reportedly used the funds to make a down payment on an apartment, buy a brand new BMW, and deposited some of the money in his bank account.
Threatening To Expose Company's Illegal Business
According to court documents released on November 6th, the bitcoin extortion case involves the man blackmailing a company after he came across some evidence - which showed that the firm had conducted several illegal transactions.
The court papers have identified the accused as Du Bing, and prosecutors have said that Bing threatened Zheng (the company’s board secretary) by telling him that he would expose the firm’s illicit business activities.
Bing also managed to force the company to pay him 3 million Chinese yuan (appr. $432,000) in bitcoin. At the time, Zheng was able to purchase 2,101.209 bitcoins as the cryptocurrency was trading for only about $200 (in 2015).
After Bing received the bitcoins from Zheng, he immediately converted them to cash in order to buy various luxury items. Per court documents, Bing has been sentenced to 13 years in prison as he has been charged for blackmailing and extortion.
The accused has also been ordered to pay a fine of 50,000 CNY (appr. $7,200) and the items he purchased using the funds (obtained from extortion) have been confiscated by authorities.
Court Says Defendant Intentionally Used Bitcoin Due To Its Anonymous Nature
Bing’s attorney had argued that there were currently no (proper) laws in China for bitcoin-related transactions as it was a loosely regulated virtual commodity. There was also no proof that the accused had purchased his car and real estate using bitcoin, according to Bing’s defense lawyer.
However, the court said:
Although it is impossible to [determine] the source of bitcoins in Du’s hardware wallet, which is due to bitcoin’s anonymous nature …[there is sufficient evidence that Bing] chose bitcoin payment to cover up his criminal behavior.
As CryptoGlobe reported in October, a 21-year-old North London resident and computer analyst had hacked 319 million iCloud accounts. The cybercriminal, named Kerem Albayrak, had demanded that Apple Inc pay $150,000 in bitcoin in exchange for him not selling the compromised accounts.
However, Albayrak was tracked down by authorities, and he was charged with one count of blackmail and two counts of “unauthorized acts intending to hinder access to a computer.”