Ministry of Public Security of PRC Warns People off Pyramid Selling Under the Cloak of Blockchain
Ministry of Public Security of PRC released a list on May.20 warning against Pyramid Selling Under the Cloak of Blockchain. With 61 pyramid selling scams on the list, one of these scams calles “Goden Brick Digital currency” is prominent on the list with a sense of blockchain.
Before the list released, many people are confused at legality of “Golden Brick Digital currency”, some people even consulting others in the Baidu forums,“Is it a project supported by government?” or “Is it a kind of pyramid selling?”.
In fact, these scams are under the cloak of “national project”, “targeted poverty alleviation”, with “low investment, high return” as bait, expanding their business through communication tools such as Wechat groups. These scams even forging the Seals, Certificates and Official Documents of State Ministries and Committees.
The pyramid selling scam was established in Beijing on April 1st, 2017, and they cheat victims that RMB had formally joined the International Monetary Fund (IMF) Special Drawing Rights (SDR) currency basket, the state issued the first phase of China’s virtual asset reserve digital currency.
Similar to other Internet pyramid selling projects, “Goden Brick Digital currency” manages and organizes participants through Wechat Groups. They used Wechat to develop members nationwide, and sent video, audio and other information to the Wechat group for propaganda, thus inducing participants to pay membership fees to obtain membership. After paying the membership fee, participants get the corresponding grade. They distribute virtual coins “GRDC” for participants.
Before this, the state has released a list of judicially recognized pyramid selling currencies (37 monitored in the second half of 2018).
In fact, this kind of scam that wrapped up in the popular concepts of “digital currency” and “encrypted currency” is not only common in China, but also abroad.
For example, in July 2018, Shinil, a Korean company conducted ICO by claimed that there might be as much as $134 billion of gold on the wreckage of the Russian naval vessel Dmitrii Donskoi. The ICO involved more than 2600 investors, amounting to about $8 million. In September, it was classified as a fraud by the Korean police.
As relevant laws and regulations improved in various countries or regions, such fraud will get timely exposure and punished. Only investors adhere to the principle of “Don’t invest if you don’t know”can they avoid potential risks.