Three bitcoin trading fraud suspects arrested

Police in East China's Zhejiang Province have arrested three bitcoin fraud suspects, media reported Wednesday, in what has been the country's first-ever case of fraud involving the digital currency.[Special coverage]

An investor surnamed Qiao from Zhejiang Province made a report to the local police after his 90,000 yuan investment in the digital currency was gone, a Zhejiang local newspaper reported Wednesday.

Qiao registered at GBL, a bitcoin trading platform, on October 22, but unexpectedly couldn't log into the platform just four days later. He then realized that he had been cheated.

The three suspects, surnamed Liu, Jin and Huang respectively, set up the platform in May this year, with its server in the US. The website claimed that it is headquartered in Hong Kong.

The bitcoin trade volume on the platform ranked No.4 among all bitcoin trade platforms in China, the report said, and registered users had reached 4,493 by September.

Investors on the GBL platform could lose over 25 million yuan ($4.1 million), media reports said.

Investing in bitcoins has been gaining in popularity for over half a year in China. Trading volume on the largest bitcoin trading platform in China, BTC China, has exceeded 100,000 bitcoins, Xinhua reported Tuesday.

The price of one single bitcoin was about 6,610 yuan on BTC China on Wednesday.

Lawyers and experts said that trading of bitcoins in China still lacks supervision, and investors should be cautious about the risks.

Yi Gang, deputy governor of China's central bank, said at a forum on November 20 that the central bank is not likely to admit the legitimacy of bitcoins in the short term.

Bitcoin is a type of digital currency, which is not supervised or regulated by any group or organization. The total number of bitcoins is capped at 21 million, and will not increase anymore, media said.

Bitcoins came into circulation in 2009, when $1 could purchase 1,300 bitcoins. Its price stood at $6 to $7 as recently as July 2012, but its value has now exceeded $1,000.