- Over 10,000 people were lured into the virtual currency pyramid scheme.
- Chen and his accomplices returned 22.59 million yuan in illegal gains.
- They were sentenced to three years in prison, and suspended for five years.
Chinese authorities have convicted three ringleaders of a crypto pyramid scheme that defrauded over 10,000 people. On September 18, the Zhongxiang City Procuratorate of Hubei Province confiscated over 22.59 million yuan (roughly $32 million) in illegal profits, and each leader received a three-year prison sentence, suspended for five years, and was fined 350,000 yuan each.
Chen, Ding, and Fu orchestrated the scheme, which deceived victims through a fake virtual currency project that amassed more than 57 million yuan.
Investor’s Loss Exposes WeChat Scam
The scheme started in late 2021 when the trio created an app promising high returns through virtual currency investments. They heavily promoted the project through social media platforms and offline meetings, luring victims with promises of “guaranteed profits” and easy money.
The breakthrough came after one of the victims, Mr. Wang, invested $5,000 after being drawn into a WeChat group by false claims of enormous returns. However, the group vanished, and he couldn’t withdraw his money, leading him to alert authorities.
After months of investigation, authorities found out that the scam’s leaders had organized the operation as a pyramid scheme, with profits solely reliant on recruiting new members. The digital currency had no real value, and the project collapsed once recruitment dropped.
Read also: China’s First: Jail Time for Stealing Crypto Wallet Keys
The prosecutors emphasized that all 22.59 million yuan of illegal profits were returned, cautioning the public about the dangers of such fraudulent schemes and urging vigilance when faced with high-return promises.
Malaysian Businessman Extradited to China
Recently, a Malaysian businessman was extradited from Thailand to China to face charges of leading a 100 billion yuan ($14 billion) cryptocurrency fraud syndicate. He is the first suspect in an economic crime that Bangkok has handed over to Beijing since an extradition treaty between the two countries took effect in 1999, according to the Chinese Ministry of Public Security.
Read also: Turkish Authorities Dismantle $1 Billion Crypto Ponzi Scheme
The conviction of these pyramid scheme leaders underscores the underlying risks associated with investing in cryptocurrencies. While the digital asset market has experienced significant growth, it remains susceptible to fraudulent activities.
The case serves as a warning for investors, highlighting the need for due diligence and avoiding get-rich-quick schemes. Additionally, the successful recovery of the stolen funds offers some relief to the victims, but it is crucial to stay alert and educate oneself about the potential pitfalls of cryptocurrency investments.
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