An alleged hacker held by Chinese police in August has admitted that he stole bitcoins equivalent to three million dollars through electronic wallets, Paper.cn reported on Saturday.

On July 27, Zhongyuan Oilfield Public Security Bureau of central China’s Henan Province received a report from a resident, a Mr Wu, claiming that he had lost about 50 thousand dollars worth of the cryptocurrency from an electronic wallet stored in an app on his phone. Wu, a professional investor, had been investing in Bitcoin since last year. In early 2017, he joined a WeChat group of traders, where they exchange news about Bitcoin online.

The man arrested was the head of the group, a Mr Dai, 30, who lives in Shanghai. It was he who promoted the app to Wu,  Paper.cn reported.

Dai told Wu the electronic wallet was a safer place to keep bitcoins than the usual trading platforms. On July 17, under Dai’s persuasion and instruction, Wu downloaded the app, registered an account and transferred all his cryptocurrency to the wallet. 

A week later, when Wu came back from travelling, he found out that the bitcoins in his account had disappeared. He immediately reached Dai. To Wu’s surprise, Dai offered compensation for the loss as he had introduced the app to his group colleague, although he claimed not to know why the bitcoins had disappeared.

The suspicious movement of Dai also got police’s attention. After learning the transaction details, they found a breach. No matter how the stealing is done online, the suspect has to cash in the stolen money and deal with the bank.

Based on the preliminary evidence, on August 9, the police arrested Dai and found 27 bank cards and multiple mobile phones in his home, the report said. It turned out that Wu was proficient in software programming and hacked accounts by rewriting the source code of the app, through which he got usernames and passwords.

Dai transferred the stolen bitcoins back and forth via hundreds of electronic wallets in order not to be traced and sold them at low prices on trading platforms. In this way, he acted in three cases, which involved three million dollars. Dai’s account has been frozen and one-tenth of the stolen money has been recovered.

The successful detection of this first case on bitcoin theft in China provides ideas and methods for breaking such cases. More public securities are restarting investigations of  related cases.

According to a Reuters report in February, China is the world's leading venue for bitcoin trading, with analytics site Bitcoinity estimating that the three biggest bitcoin exchanging platforms in China; OkCoin, Huobi and BTCC, had accounted for more than 90 percent of the global bitcoin market on Jan 11, 2017.

“Three bitcoin trading platforms have been closed before November in China. At present, the financial department only recognizes bitcoin as a virtual commodity, not a virtual currency. So it’s prudent to invest in bitcoin,” said Su Meizhou, the leader of the criminal investigation branch of Zhongyuan Oilfield Public Security Bureau.