China arrests $15 million crypto pyramid masterminds

China arrests $15 million crypto pyramid masterminds

This is the first online cryptocurrency pyramid scheme in Shanghai, according to local publication Baijiahao. The Shanghai police investigated the scammers, involving colleagues in Beijing, Hainan, Shaanxi, Sichuan and other cities in China. The investigation lasted more than six months.

According to Chinese police, the organizers of the fraud scheme were about a dozen local residents. They launched an investment platform in 2020 and raised more than 100 million yuan ($15 million). The platform claimed that the company was developing “the fastest blockchain in the world” and was a “billion-dollar application corporation.

The pyramid scheme was simple enough – after registering on the platform, a user bought at least 1,000 “own tokens” of the platform and began to receive “passive income” from them. However, the main income was from attracting new users – there was a developed referral system. In total, more than 60,000 users were registered on the platform, and the maximum number of referral levels reached 72.

According to the laws of the PRC, the organizers of such pyramid schemes with more than 30 participants and the number of levels more than three are subject to criminal liability.

Earlier, U.S. law enforcement agencies charged four suspects with creating the JetCoin cryptocurrency pyramid and defrauding investors of a total of $44 million.

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Written by Renat
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