The crypto community and authorities in Asia are facing a serious case of DGCX fraud valued at $1.8 billion in USDT. The scam operated under the false guise of being linked to the Dubai Gold and Commodities Exchange (DGCX). The alleged leader of the scheme has sparked outrage by publicly mocking victims, questioning their ability to detect the deception. Meanwhile, Hong Kong police arrested four people connected to this fraudulent network.

Details of the Fraud on the XinKangJia Platform

The scam was centered on the XinKangJia platform, which was promoted as the Chinese branch of DGCX. It offered fixed daily returns of 1% on investments denominated in USDT, supposedly backed by commodities such as gold and oil.

On June 25, XinKangJia abruptly froze withdrawals for its approximately 2 million users and disappeared the following day. Investigations revealed that before this, the platform had transferred nearly $1.8 billion in USDT (around 13 billion yuan) to offshore wallets through the Tornado Cash cryptocurrency mixer. This action complicated fund tracing and highlighted sophisticated money laundering via blockchain.

Arrests and Leader’s Mockery of Victims

Hong Kong authorities arrested four individuals linked to the fraud. However, the alleged mastermind evaded capture and fueled outrage by publicly mocking the victims. These remarks have been condemned by the crypto community, which is demanding justice and stronger controls against fraud.

Blockchain security experts, such as Infini hacker, have stressed the difference between legitimate investments and fraudulent schemes, stating they maintain long positions in Ethereum (ETH).

Impact on Bitcoin, Ethereum, and the Cryptocurrency Market

This case raises concerns about trust in the crypto ecosystem. Although the fraud was based on USDT, a widely used stablecoin, its repercussions may affect leading cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH).

• Trust in stablecoins: USDT, issued by Tether, is essential for market liquidity. Frauds like this can affect the perception of security, although Tether itself has not been directly implicated.
• Market volatility: News of large-scale frauds often increases volatility, as retail investors adopt more cautious positions.
• Use of mixers: Services like Tornado Cash hinder traceability and increase regulatory pressure, particularly on the Ethereum network.

Regulatory and Legal Aspects in Asia

The case highlights the need to strengthen regulation in Asia and globally to protect investors and combat cryptocurrency fraud. Hong Kong has intensified its oversight of crypto platforms, although the rapid evolution of the sector poses an ongoing challenge.

The use of mixers to conceal illicit funds is under regulatory scrutiny. The ban or strict regulation of Tornado Cash in various jurisdictions reflects efforts to curb money laundering through cryptocurrencies.

The absence of the fraud’s leader underscores the importance of international cooperation to pursue cross-border crimes involving digital assets.

Conclusion

The $1.8 billion fraud tied to the fake DGCX XinKangJia platform is one of the most significant scandals in the recent crypto world. The combination of technological sophistication, massive fund volume, and the leader’s defiant attitude has sparked outrage and calls for stronger regulation.

This case underscores the importance for investors to verify the legitimacy of platforms and understand the risks. Likewise, authorities must strengthen their capabilities to detect and dismantle fraudulent networks, safeguarding market integrity and user trust.