If you thought Wuhan City was over for 2020, well, think again. Reports indicate that at least some of the 83 tons of gold bars, used as collateral for loans, turned out to be gold copper.
For more than five years, Wuhan Kingold Jewelry has secured gold collateralized loans of more than 20 billion yuan ($ 2.8 billion) with the fake bars.
83 tons of fake gold bars
According to a report of ZeroHedgeWuhan Kingold Jewelry Inc., a company founded and operated in Wuhan, China, has received loans of more than 20 billion yuan ($ 2.8 billion) in the past five years from Chinese financial institutions, mainly trust companies.
This is where the twist comes from. According to reports, at least some of the 83 tons of gold bars used as collateral for that loan turned out to be gold copper.
The massive scam came to light in February. Back then, Dongguan Trust, known as a Chinese shadow bank in he report by ZeroHedge, tried to liquidate the guarantee to cover the debt in default.
"To his surprise, the Dongguan Trust said it discovered that the gleaming gold bars were actually gold-plated copper alloys."
Kingold allegedly took loans against gold to increase his cash holdings and support business operations. What is surprising in this case is that the insurance companies agreed to cover it, and no one verified the authenticity of the gold for years.
This does not happen with Bitcoin
Being as resourceful as the cryptocurrency community tends to be, people did not miss an opportunity to joke about the scandal. One that stands out, of course, is "Goldconnect", which refers to one of the most infamous scams in the field: Bitconnect.
However, people said that Bitcoin fixes this, and they are nothing but correct.
One of the most essential inherent qualities of bitcoin is that it cannot be counterfeited. Not until the network works properly, of course.
To validate transactions and avoid double spending, miners go through previous transactions associated with the sender's address, to verify that they did in fact own the bitcoin spent and had not spent it before. And since the only way to fake bitcoin is essentially to spend it in more than one place, this is how the network handles the problem.