AI-generated digital collectibles involved in fraud; two people sentenced to 8 years and 6 months and 7 years and 2 months.

[Block Rhythm] On August 17, according to the official account of the Shanghai First Intermediate People's Court (Shanghai No. 1 Intermediate Court), the court recently concluded a second-instance criminal case involving digital collectibles. Defendants Wang and Liu, under the guise of operating a digital collectibles platform, issued digital collectibles with underlying electronic images generated by AI, falsely promoting the appreciation prospects of the aforementioned digital collectibles and promising a 'half-price' capital guarantee. The court ruled that Wang and Liu constituted the crime of fundraising fraud, and they were sentenced to eight years and six months, and seven years and two months in prison, respectively.

From October to December 2023, Wang and Liu registered a technology company in Shanghai, primarily engaged in a digital collectibles platform. During this period, Wang and Liu used the platform, WeChat groups, and other online media to publicly promote and sell digital collectibles to the public. Wang and Liu issued 7,888 to 16,888 digital collectibles on the platform at prices ranging from 9.9 yuan to 69.9 yuan. They controlled the trading volume and prices of collectibles in the secondary market on the platform through self-buying and self-selling to create a false impression of active trading; when victims could not trade collectibles and requested refunds, they blacklisted the victims.

The Shanghai No. 1 Intermediate People's Court, after hearing the case, believes that the technology company involved primarily operates a digital collectibles platform and has not obtained the necessary administrative licenses. The digital collectibles in question lack support from cultural and artistic creation activities, their sale prices are significantly deviated from their value, violating market rules. The "on-chain services" provided by the platform also do not have considerable value. The actions of Wang and Liu are essentially not the sale of goods but rather a deception of victims to obtain investment funds under the guise of operating a digital collectibles platform. Their actions possess characteristics of illegality, publicity, inducement, and social nature, and should be recognized as illegal fundraising. Furthermore, Wang and Liu used fraudulent methods for illegal fundraising with the aim of unlawful possession, involving a massive amount of money, which constitutes the crime of fundraising fraud.