Chinese Police Infiltrate Massive Crypto Ponzi Scheme

The Chinese government hasn’t stopped its pursuit of eradicating crypto scams in the South Asian nation. Today, its law enforcement agents successfully penetrated a massive crypto Ponzi scheme, making several arrests and seizing several assets (physical and digital).

A Popular Pyramid Scheme Is A Crypto Scam

A Local news agency, Xinhua News, reported that the police have alleged that the popular pyramid scheme “Ripple Unionpay Community” was a scam. Since last year, the police had suspected the scheme whose primary operations were performed through a mobile app as a scam.

The economic crime investigation department of Baiyin city public security bureau (Pingchuan branch) was the first to report their suspicion to the police last year. The police alleged that the scheme promised to give each of its new members some XRP tokens. The project further promised various rewards to members when they performed specified activities.

Such awards include community promotion, community operation, and performance rewards. Operators of the scheme usually connect with potential members using popular social platforms such as WeChat and QQ. Before the burst, the scheme already boasted nearly 50K members across 32 Chinese provinces.

Following the arrest of eight suspects, the police from the Pingchuan branch of the Public Security Bureau of Baiyin city also seized about 9m worth of XRP tokens (about 127m yuan or $19.5m). The police also seized various gadgets from the arrested individuals, including mobile devices and computers.

Enforcing The Illegality Of Crypto Transactions

After Chinese authorities declared that crypto transactions were illegal, several provincial law enforcement agents have been mandated to enforce this law. Last month, the authorities escalated their efforts to make it difficult for anyone to own or trade these virtual currencies. Part of these efforts included the introduction of crypto transactions into judicial interpretation.

Hence, it is now a legal offense for anyone to state that he raised cash using digital currencies. Also, the government reiterated that crypto mining is still illegal. But part of the punishments for any illegal crypto miner would be to pay a substantially high electricity tariff. However, it clarified that the punishment doesn’t mean that crypto mining is acceptable or legal.

Many crypto-related companies who left China have lamented the significant losses they incurred. One of Huobi’s founders, Du Jun, recently revealed in an interview with CNBC that their exit from the south Asia nation made them incur more than 35% loss in revenue.

Rampant Crypto Scams In Recent Times – Chainalysis

The latest data from on-chain analytics firm, Chainalysis, indicate that there has been a widespread increase in the number of crypto-related scams within the past 12 months. One of the firm’s crypto scam investigators, Rich Sanders, disclosed that scammers had earned nearly $8m worth of cryptos between January 2021 and January 2022. 

Sanders opined that one of these scammers’ tricks is to pressurize their victims till they invest in their supposed crypto investment scheme. He further explained that most scammers are always patient and consistent until they successfully convince their victims to part with their hard-earned money.

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