Two Chinese cities have dismantled a massive Ponzi scheme, a local portal reported on Tuesday. The action also seized US$ 16 million that were in the group’s possession.
The seizure was jointly carried out by the Shanghai Public Security Bureau and the Yangpu Public Security Bureau. The two bodies conducted a joint investigation into pyramid schemes using cryptocurrencies, which investigation resulted in the seizure.
According to a local report, the organization started its illegal activities in June 2020. The seized amount was accumulated over almost two years of activity. The ringleader of the scheme, known only as Mou, was also apprehended.
Shanghai demotes grand Ponzi scheme
According to the indictment, Mou established a company that provided cryptocurrency services to clients, promising high returns to investors.
To attract more users and expand the scale of the organization, Mou’s platform has also given out various awards and marketing initiatives. However, these activities were just a front to hide the coup.
Six months ago, Shanghai police detected dubious activities by the organization and conducted an investigation. It turned out that the tokens offered for sale had no market value and were illegal. The police then arrested ten people linked to the criminal entity.
In the end, the police revealed that the scheme raised 100 million yuan, which corresponds to the US$16 million seized. Shanghai officials praised the investigation and said it was the first cryptocurrency pyramid scheme discovered in the city’s history.
It is believed that at its peak, the platform had around 60,000 active members. Just to compare, less than 30% of the municipalities (3,770) have more than 60 thousand inhabitants.
“The general public should raise awareness of risk prevention and avoid pyramid schemes. The Shanghai Bureau of Investigation will continue to crack down on economic crimes that jeopardize citizens’ legitimate rights and interests,” Shanghai Police said.
City plunges into the metaverse
Although it has a hostile stance towards private cryptocurrencies, China is much more open to other niches in the digital sector. The country has taken the lead in creating a central bank digital currency (CBDC), for example.
As Cryptheory reported, trials of the digital yuan began to be opened to foreigners in January. The use of digital currency is already widespread in some cities and services in the country, including Shanghai.
In addition to the CBDC, China’s largest city has included Metaverse in its five-year (five-year) development plans. In this regard, Shanghai officials aim to encourage “the application of the Metaverse in areas such as public services, commercial offices and entertainment.