China Is Outraged Over An 86 Million CNY Crypto Pyramid Scheme
On the evening of April 17, Police in China’s northwestern city of Xi’An have arrested the mastermind and nine accomplices of an extremely large cryptocurrency pyramid scheme, in which 13,000 investors were reportedly swindled out of 86 million Chinese yuan ($ 13.7 million). It is the first nationwide pyramid scheme in the mask of the newly-emerged cryptocurrency investment.
“It was found out that the scam amassed over 86 million yuan with 13,000 victims affected across 31 cities in the country.” police told media at the press conference. The investigation was started on April 5 after Xi’An police received complaints from locals in the city who was caught up in the scam.
13,000 investors fell victims within 18 days
It was reported that the scheme has been plotted several months ago since last October when cryptocurrencies and ICO (Initial Coin Offering) were in full swing in the country. Real actions were launched on March 28 this year under the manipulation of the principal criminal surnamed Zheng colluding with nine accomplices.
Simply in 18 days, 13,000 investors were hoaxed via a promise of high returns by both commissions for enrolling new members into the scheme and investment in the Da Tang Coin (DTC) on their alleged DBTC platform created by the DTC Holding – a firm under the suspect’s control registered in Hong Kong.
Spent 30,000 yuan hiring a foreigner to be the chairman of the company
To make it real and convincible, the alleged company held several promotional events in multiple cities in the country, and they even reached their arm far out of China to Cambodia. In those marketing events, it was claimed that new members can easily make 80,000 yuan ($12,000 approximately) per day with an initial investment of 3 million yuan ($480,000) to buy in the DTC at 3 yuan ($0.5) per token. A high return of 2 million per month means the initial investment could be earned soon in one month and a half.
The “brainy” criminals also hired a foreigner to be the chairman of the company at the cost of 30,000 yuan, in an effort to forge the company into a multinational hi-tech enterprise to enlarge its influence. Beyond that, they also promoted the project on Ximalaya FM, an audio-based sharing platform which has 300 million users. Seeing all these, investors fell victims.
The news came a week after the $660 million crypto scam happened in Vietnam with 32,000 investors affected. Regarding the fraud amount and people affected, it seems that regulation efforts are urgently needed to crackdown financial crimes and pyramid schemes related to cryptocurrencies in a bid to create a healthy and orderly environment for blockchain startups.