Chinese authorities arrest creators of crypto pyramid that defrauded thousands of victims – DiarioBitcoin

Chinese authorities arrest creators of crypto pyramid that defrauded thousands of victims - DiarioBitcoin

Chinese authorities arrest creators of crypto pyramid that defrauded thousands of victims - DiarioBitcoin By DailyBitcoin Editor

Chinese authorities arrest the suspected masterminds behind an online virtual currency pyramid scheme.


Authorities in China have announced the arrest of 10 suspects they say are behind an online pyramid platform that is said to have stole millions of dollars from users. The suspects are accused of using the promise of high returns and offer a regular income to attract more victims, in addition to inviting them to recruit new users with false proposals.

Report Suggests Suspected Scammers May Have Scammed Unsuspecting Investors for more than USD $15 million or 100 million yuan.

According to the report, the arrests of the suspects (whose names remain anonymous) followed the completion of a six-month investigation into the platform’s activities. The investigation was launched after authorities reported following the use of a digital currency that was used to implement the pyramid scheme in Shanghai.

The Shanghai Public Security Bureau (EITSPS) Economic Investigation Team said the pyramid scheme masterminds had reinforced their scam claims by saying they provided “value-added services for investment in virtual currency”. The scammers also told users that their project was a “unicorn in the field of global applications”.

More than 60,000 accounts created

However, after completing the investigation, the Chinese police discovered that the online pyramid scheme, which had been established in 2020, had overseas servers. These servers, according to the report, were controlled by the main criminal suspect known only as “Mou”. Through the so-called technology promoter company blockchainwith the promise of high yield and regular payments, Mou and his accomplices were able to attract unsuspecting investors.

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It is also believed that to make the whole thing more plausible, Mou created an advertising and promotion team to attract more users to pay membership fees.

This team would also set up social media chat groups that they would use to recruit more users to join the scam. That is, the personal treatment was part of the deception.

Before being arrested, the suspects had successfully opened more than 60,000 member accounts, according to the report.

how they operated

According Baidu, users first completed the platform login and registration via the online invitation code. After topping up at least 1,000 platform tokens as an entry fee, they were offered that they could earn a certain percentage of static revenue. However, the greatest reward that members of the platform could obtain was not that, but in the profits obtained by recommending it to others (typical pyramid scheme). According to the platform rules, every time a new user was referred, the user received direct referral rewards from the platform, and if users continue to develop, they will also receive indirect referral rewards. Also, platform members could upgrade their membership levels according to the accumulated coins paid by customers.

At present, the court has issued a judgment of first instance in accordance with the law. According to relevant laws and regulations, if there are more than 30 people involved in pyramid selling activities within a pyramid selling organization and the level is higher than 3, the organizer and the leader will be investigated for criminal liability. Shanghai police have asked the Ministry of Public Security to launch a nationwide “cloud operation” against other suspected participants to crack down.

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It is worth remembering that in 2020 hundreds of crypto scams occurred in the world, the main one being in China.

Here you can see what are the most frequent traps and scams with cryptocurrencies, from the mouths of the victims themselves.

Sources: Baidu,, archive

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WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.

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