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    Home » Crypto News » Bitcoin Solves This: $2.8 Billion Worth of Gold Counterfeited by Chinese Company from Wuhan

    Bitcoin Solves This: $2.8 Billion Worth of Gold Counterfeited by Chinese Company from Wuhan

    Author: George Georgiev

    Last Updated Jun 30, 2020 @ 07:56

    If you thought that the city of Wuhan was done for 2020, well, think again. Reports have it that at least some of 83 tons of gold bars, used as collateral for loans, turned out to be gilded copper.

    For more than five years, Wuhan Kingold Jewelry has been getting gold-collateralized loans worth over 20 billion yuan ($2.8 billion) with the fake bars.

    83 Tons of Fake Gold Bars

    According to a report by ZeroHedge, Wuhan Kingold Jewelry Inc., a company founded and operated in Wuhan, China, has received loans for more than 20 billion yuan ($2.8 billion) over the past five years from Chinese financial institutions, mainly trust companies.

    Here’s where the twist comes. At least some of the 83 tons of gold bars that were used as collateral for that loan reportedly turned out to be gilded copper.

    The massive scam came to light in February. Back then, Dongguan Trust, referred to as a Chinese shadow bank in ZeroHedge’s report, attempted to liquidate the collateral to cover default debt.

    ADVERTISEMENT

    “To its shock, Dongguan Trust said it discovered that the gleaming gold bars were actually gilded copper alloy.” – Reads the report.

    Supposedly, Kingold took the loans against gold in order to increase its cash holdings and to support business operations. What’s shocking in this case is that insurance companies agreed to cover it, and nobody checked the authenticity of the gold for years.

    gold
    Companies Loaning Against Gold Collateral

    Can’t Happen With Bitcoin

    Being as witty as the crypto community usually is, people didn’t miss the opportunity to joke about the scandal. One that stands out, of course, is “Goldconnect,” referring to one of the most infamous scams in the field – Bitconnect.

    Nevertheless, people said that Bitcoin does fix this, and they’re nothing but right.

    One of the most essential inherent qualities of bitcoin is that it can’t be counterfeited. Not until the network is functioning properly, of course.

    To validate transactions and prevent double-spending, miners go through previous transactions associated with the sender’s address, to verify that he did, in fact, own the spent bitcoins and hadn’t spent them before that. And since the only way to counterfeit bitcoins is to essentially spend them in more than one place, that’s how the network handles the problem.

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    Tags: Bitcoin China Gold
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    About The Author

    George Georgiev
    More posts by this author

    Georgi Georgiev is CryptoPotato's editor-in-chief and a seasoned writer with over two years of experience writing about blockchain and cryptocurrencies. Georgi's passion for Bitcoin and cryptocurrencies bloomed in late 2016 and he hasn't looked back since. Crypto’s technological and economic implications are what interest him most, and he has one eye turned to the market whenever he’s not sleeping. Contact George: LinkedIn

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