Digital Collectibles Scam Unraveled: Shanghai Court Concluded High-Profile Fraud Case Involving AI-Generated Assets

The Shanghai First Intermediate People’s Court has concluded a significant criminal case exposing an elaborate scheme in the digital collectibles sector. The defendants, Wang and Liu, orchestrated a sophisticated fraudulent operation disguised as a legitimate digital collectibles platform, resulting in substantial prison sentences and financial penalties.

The Deceptive Business Model

Between October and December 2023, Wang and Liu established a Shanghai-based technology company purporting to operate a digital collectibles platform. Their operation relied on a deceptive two-tier pricing strategy: they acquired AI-generated digital images from third-party sources for 2,888 yuan per image, then deployed blockchain technology—strategically placing these images on a private blockchain to artificially elevate their perceived value as “investment-grade” digital collectibles.

The fraudsters flooded multiple online channels with promotional materials, leveraging WeChat groups and various digital platforms to reach potential victims. They listed their AI-generated collectibles at inflated prices ranging from 9.9 to 69.9 yuan, ultimately issuing between 7,888 to 16,888 individual tokens to unsuspecting buyers.

Manipulation Tactics and False Promises

To build credibility, Wang and Liu fabricated claims of overseas presence and exhibited apparent financial abundance through strategically distributed red envelopes in chat groups. Their marketing pitch promised unrealistic returns: guaranteed “half-price” buyback guarantees, physical asset claims, and assured appreciation potential.

The pair engineered a complex gamification system featuring “blind boxes,” synthesis mechanisms, airdrops, and exclusive purchase opportunities—all designed to psychologically manipulate investors into continuous participation. Critically, they manipulated secondary market dynamics by executing wash trades of their own collectibles, artificially inflating trading volumes and prices to create an illusion of legitimate market activity.

When victims attempted to liquidate their holdings or demand refunds upon discovering the fraud, Wang and Liu simply blocked them from accessing customer support, trapping capital within the platform.

Conviction and Sentencing

The Shanghai First Intermediate People’s Court concluded the case with guilty verdicts on fundraising fraud charges. Wang received a sentence of eight years and six months imprisonment plus a 550,000 yuan fine, while Liu was sentenced to seven years and two months with a 500,000 yuan penalty. The court ordered confiscation of all criminal instruments and mandated full restitution to victims, with ongoing obligations for any remaining balance recovery.

This concluded case serves as a critical cautionary tale about the intersection of emerging technologies—AI and blockchain—with financial fraud, demonstrating how bad actors weaponize legitimate innovation to perpetrate complex investment schemes.