Chinese police arrest nine suspects in a $13 M crypto pyramid scheme
The Chinese police have arrested the founders of the accused cryptocurrency pyramid scheme post several weeks of investigation.
Authorities have shut-down the operations which are alleged to have obtained 86 million yuan ($13 million) from over 13,000 participants in the scheme already. The scheme was initiated in this March 2018. In such a short span of time, it has already affected 31 provinces and municipalities across the country.
As reported by Huashang news the scheme sold a cryptocurrency – DBTC – at a token price of 13 yuan ($0.48) and promised new members returns of 80,000 ($13,000) yuan a day for an initial investment of 3 million yuan ($480,000).
The scamsters also hired a foreign-looking man, to appeal the international investors across the globe. For this, they spent 30,000 Yuan for the man to be the chairman of the DTC, a Hong Kong-registered holding.
To make the project look believable, the alleged project organized promotional events in several cities across China and in Cambodia and promised DBTC listings on several Chinese exchanges.
The Economic Investigation Department, initiated an investigation, into the scheme and its alleged ringleader going by the name of Zheng.
After arresting nine suspects in total, the police believe that suspects had been planning the scheme since October 2017 and had hoped to capitalize on the popularity of Blockchain to attract investors.
China has been the hot favorite in terms of such frauds taking place the past.
Similar Crypto-scams like Gemcoin Ponzi scheme in 2015 went on to affect many Chinese and Chinese-American investors, and the infamous $1.5 billion dollar EDG pyramid scheme in January 2017 pushed Chinese law enforcement to take a tough stance towards crypto-fraud.
“punishing the members of the pyramid selling field, [and] annihilate and destroy the network pyramid selling and criminal activities.” - The Ministry of Public Security
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