Police officers in Jinan, a city in China’s Shangdong province, have arrested a group of 10 people suspected of being part of a pyramid scheme that pretended to be a blockchain project, China Money Network reports. The scam robbed victims of about 300 million yuan ($46.8 million).
According to the local authorities, the suspects told victims they could get various amounts of original shares and dividends in their blockchain peer-to-peer network if they invested money in different membership packages. The same scheme has already been investigated in several cases across China.
In 2017, the group set up an e-commerce platform and required of its members to pay for membership rebate programs. The purported blockchain venture developed a hierarchical rebate scheme in five levels, from county to regional agent. The police found that a large number of members were college students, probably attracted by the buzz terms. In fact, the scam knew how to distinguish itself by using trendy and catchy phrases like “Western Development,” “Poverty Alleviation,” or “One Belt One Road,” the last being a massive development initiative of China’s government. The company presented itself as a blockchain and Big Data project with a bright future.
The high number of blockchain-related scams in China is a testament to the keen interest and enthusiasm from investors eager to benefit from the blockchain hype. However, most neglect to do their due diligence and ignore the multiple warnings from the government and the police.
Last week, Chinese prosecutors announced that more people were put on trial in connection with OneCoin, a cryptocurrency that is allegedly a pyramid scheme. The total number of people prosecuted is now 98. The authorities also revealed they had recovered 1.7 billion yuan (about $267.5 million). It is estimated that the scheme involved 15 billion yuan in total ($2.4 billion).
The alleged OneCoin pyramid scheme has been under investigation for about two years, with the Ministry of Public Security acting as the supervisor of the investigation. Entities associated with OneCoin - a cryptocurrency launched by Bulgarian citizen Ruja Ignatova - are being investigated in the US, UK, Italy, Canada, Ireland, and Ukraine. Despite the fact that OneCoin is often labeled a scam, it continues to have many supporters in different countries.
This article appeared first on Cryptovest
