Their names are Chen Bo, Yuan Yuan, Ding Zanqing, Peng Yixuan, Wang Renmi and Dong Jianhua. They are alleged to have operated a massive US $2.9 billion Ponzi scheme involving a cryptocurrency called PlusToken.
They were arrested by Vanuatu Police and Immigration agents in a joint operation after their house on the wharf road was raided in the early hours of the morning.
Five unidentified Chinese law enforcement officials were present during the raid. They entered the premises afterward, to assist Vanuatu officials with identifying Chinese language documents and materials.
On the same day the raid occurred, cryptocurrency analysts reported a sudden stop in online activity relating to PlusToken.
PlusToken is a cryptocurrency wallet created in April 2018. It paid its members to deposit their coins into its wallet, and it purported to make money for depositors using arbitrage.
Invest more than US $500 worth of cryptocurrency, the promoters said, and you can participate in the ‘smart dog’ feature. This leverages your investment for use in digital currency arbitrage. It’s a complex term, but the concept is simple enough:
Crypto prices are constantly changing, and demand is higher in some markets than in others. China’s is particularly hot. People learned that it was possible to buy a chunk of crypto on one exchange, immediately sell it on another, and pocket a tidy profit. This used to be common in physical currency markets, and often caused havoc, until regulations were introduced to stabilise them.
The first players in this arbitrage game made a lot of money. Some people were doing this daily, even hourly, and making obscene sums.
Before long though, people got wind of the opportunity, and entire bot-farms (server rooms chock-a-block with dedicated computers) did nothing but blockchain arbitrage around the clock. Profit margins fell away as price differences disappeared.
But the people operating PlusToken were still offering juicy returns, allegedly promising profits of 10-30% every month. And yet according to Chinese media sources, analysts were unable to observe any arbitrage activity at all in the PlusToken wallets. So where were these massive profits coming from?
Chinese police insist that PlusToken was a Ponzi scheme. New investors’ money was being used to prop up returns for earlier ones. People were encouraged to form investor communities, and rewarded for bringing others into the mix.
In March this year, the entire house of cards began to fall apart, industry sources allege. Chinese language media tell of mixed messages from the cryptocurrency operators, about the need to ensure orderly withdrawals and computer error to explain people’s inability to withdraw their tokens.
Just weeks before, at least four of the PlusToken Six had applied for Vanuatu Citizenship. The forms were processed by Horizon Consultant, a licensed DSP agency operated by Job Andy. Mr Andy was formerly a sales manager at a local auto dealership.
The applications were compiled and submitted, and passed to Vanuatu’s Financial Intelligence Unit as part of the standard due diligence process. Now that Vanuatu is a full member of INTERPOL, the FIU can query their database directly. In addition to criminal record checks conducted in the country of origin, the FIU checks whether the applicant is wanted by police anywhere in the world, and whether they are insolvent.
In the case of the PlusToken Six, the query came up empty. There was in fact a Chinese criminal investigation under way at the time, the Daily Post was told. But because it was still secret, nothing showed up in the INTERPOL search.
The FIU repeats these INTERPOL searches annually for everyone who obtains citizenship through one of Vanuatu’s investment programmes. At least one person wanted by Chinese police was found out this way. This person is the subject of an ongoing Police investigation. No other details may be released at this time.
The Daily Post understands that greater efforts to follow due process are being made in this case.
In mid-May this year, four of the PlusToken Six were approved for citizenship. Contrary to statements made by the Prime Minister’s Office, two other applications were still pending.
About a month later, Vanuatu authorities were notified by Chinese law enforcement that these six individuals were wanted for unspecified crimes. Official letters were sent by Chinese Police, asserting that the six had forged their criminal record check documents.
Sometime after that, the Department of Immigration ruled that their citizenship was therefore invalid, and their passports were revoked.
Section 14(2) of the Citizenship Act says "A person who is found by a court to have obtained citizenship by any false representation, fraud or concealment of a material fact on his part shall cease to be a citizen 30 days after such finding...."
The Daily Post has seen no evidence to suggest such finding was made by a court, or that the 30-day period was honoured. Presumably, the purpose of that 30-day period is at least partly to allow the person in question to challenge the court’s finding.
The Minister of Internal Affairs is empowered to remove non-citizens without notice if they are wanted for crimes committed in another country. He has the power to detain them in prison or in custody until such time as the removal happens. There is no specific time limit applied to the period of detention.
But as a matter of natural justice, all persons are entitled to understand the law, and to be informed of any proceedings or decisions made against them. This includes the right to have legal counsel. At least one removal without notice in the past was the subject of a stay order from the Supreme Court.
The Daily Post has seen no evidence that the PlusToken Six were allowed to speak to a lawyer before they were extradited.
The Government of Vanuatu insists that the six were deported, with assistance and cost-sharing from the government of China. Others have argued that this was in fact an extradition, because the individuals were not simply ejected. They were sent under arrest to face trial in another country.
No arrest warrants were supplied. Chinese authorities instead provided ‘wanted’ notices.
Extraditions often occur between countries that have signed a bilateral extradition treaty. But a treaty is not necessary for extradition to occur. Some countries will not extradite a person for something that is not a crime in that country. Most countries require that the person to be extradited will get a fair trial. Some require assurances that penalties will not be imposed that would be illegal there.
Countries have refused to extradite people to the USA, for example, until they were promised that the person would not face the death penalty.
Amnesty International reports that China executes more people each year than all other nations put together.