A Chinese university student has received a prison sentence of over four years for what appears to be the first case of fraud involving crypto liquidity withdrawal in China.

Yang Qichao, a college student, has been sentenced to 4.6 years in prison for scamming investors with his token named BFF made on a public blockchain outside China. According to a report from the Chinese newspaper The Paper, prosecutors allege that after attracting an investment of $50,000 in USDT, a stablecoin issued by Tether, Yang quickly withdrew the token’s liquidity, resulting in the investor’s loss of the entire amount.

The prosecutors claim that Yang issued a fake BFF token with the same name as the token promoted by a decentralized autonomous organization (DAO), Blockchain Future Force, to mislead investors. The government says Yang lured the victim, identified as Luo, to invest by initially adding $300,000 to BFF’s liquidity pool. Luo then exchanged $50,000 in Tether’s USDT for 85,316 BFFs. Just 24 seconds later, Yang withdrew the liquidity, resulting in Luo’s BFF tokens devaluing drastically, the report reads.

Yang’s defense contended BFF token was genuine with a unique and immutable contract address, and both parties involved were experienced crypto traders aware of the risks. The defense also argued that withdrawing liquidity is a common practice in crypto trading and not against platform rules.

Additionally, the defense argued that BFF token had appreciated significantly since the incident, and Luo’s current holdings of 72,381.7198 BFF tokens could be exchanged for over $64,000 in USDT.

However, the prosecutors highlighted that Yang’s rapid withdrawal of liquidity constituted “dishonest actions” aimed at “deceiving and defrauding Luo.” The Chinese court subsequently found Yang guilty of fraud, sentencing him to prison and imposing a fine of 30,000 yuan (~$4,140).