Chinese Police arrested alleged $13 million Crypto-pyramid scheme
Xian police arrested several suspects after investigating an online platform in connection with a company alleged to have running a pyramid scheme.
Police arrested the suspects on Wednesday after a report was submitted to the Economic Investigation Department office. Report alerted that a platform was suspected of doing a scam. Nine people were arrested, six outlets were seized and 86 million yuan ($13 million) found to have been invested in the scheme, the authorities announced.
The report stated, “After nine rounds of careful investigation and continuous operations in the early days, [the bureau] grasped the fact that criminal suspect Zheng had illegal interests and organized network platform administrators Zhang Mou and Li Mou, and marketing vice president Gou to carry out criminal activities,”
The alleged company launched on March 28, 2018, as a Hong Kong-registered company called DTC Holding. They started preparing the scheme and agenda from last October 2018, according to the investigation. They made their company look authorized and convincing for the public to invest in the scheme. For this, they paid 30,000 yuan (around $4,800) to bring in a foreign-looking individual.
The report added, “The organization also went to Cambodia, Phnom Penh, Xian, Ningbo and other places to hold cryptocurrency promotion meetings. They promised that members who invested 3 million yuan can earn 80,000 yuan per day, making profits of more than 2 million yuan in a month,”
Authorities said that they have identified 3,000 cases in which blockchain companies that were trying to defraud customers. There are no promises that were made by police as to when this shutdown will happen.
Sources report that the Xian Municipal Public Security Bureau will focus on cracking down on pyramid schemes in an effort to “strengthen financial services.”