The Shanghai Public Security Bureau and the Yangpu Public Security Bureau conducted a joint investigation on pyramid schemes using cryptocurrencies. Shortly after, the authorities busted an online platform, which drained nearly $16 million in digital assets from its victims over the years.
Shanghai’s First Cracked Crypto Pyramid Scheme
According to a local report, the organization started its illegal activities in June 2020, and its leader was a criminal suspect named Mou.
The latter established a blockchain technology company to provide crypto services to customers, promising investors high returns. To attract more users and expand the scale of the organization, Mou’s platform also distributed numerous promotion awards and marketing initiatives. It is believed that the company had around 60,000 active members at one point.
Nearly six months ago, the Shanghai police detected dubious activity from the organization and conducted a thorough investigation. It found out that the tokens provided for sale had no market value and were illegal. As a result, the authorities asked the Ministry of Public Security to launch a nationwide “cloud operation” against the suspected firm.
In the aftermath, the police arrested ten people connected to the criminal entity. It also revealed that the company had drained 100 million yuan ($15.7 million) from its victims during its existence. The Shanghai officials praised the investigation saying this is the first cracked crypto pyramid scheme in the history of the city. Moreover, they gave tips to locals on how to protect themselves from being conned in future cases:
“The general public should raise awareness of risk prevention and consciously resist pyramid schemes. The Shanghai Public Security Economic Investigation Department will also continue to crack down on economic crimes that endanger the legitimate rights and interests of citizens, and effectively protect the legitimate rights and interests of consumers.”
Shanghai Delves Into The Metaverse
Despite having a hostile stance on private cryptocurrencies, China is much more open towards other niches of the digital sector – such as CBDCs and the Metaverse.
As CryptoPotato reported earlier this year, Shanghai included the latter in its 5-year development plans. Specifically, the megalopolis’ officials aim to encourage “the application of the Metaverse in areas such as public services, business offices, social entertainment, industrial manufacturing, production safety, and electronic games.”