Online pyramid scheme crime

The Supreme Court has released a typical case of online pyramid scheme crime involving virtual currency investment fraud

ChainCatcher news, the Supreme People's Court and the State Administration for Market Regulation jointly released 5 typical cases of punishing online pyramid scheme crimes according to the law, including cases of falsely promising high returns through investment in "virtual currency." The basic facts of the case are as follows:In early 2018, the defendant Chen and others used blockchain as a gimmick to plan and establish the "Certain Token" online platform to carry out pyramid scheme activities. They required participants to obtain membership accounts on the platform through referrals from their uplines and pay a threshold fee of over 500 US dollars in virtual currency to receive value-added services. Participants could use the platform's "smart dog brick-moving" technology to conduct arbitrage trading in different trading venues and earn platform profits.To evade crackdown, Chen and others moved the platform's customer service and currency distribution groups abroad in January 2019 and continued to carry out pyramid scheme activities using the "Certain Token" online platform. Statistics show that the "Certain Token" online platform registered over 2.6 million member accounts, with levels reaching 3,293 layers, and collected over 9 million pieces of various virtual currencies such as Bitcoin, Tether, and Grapefruit Coin from members.The People's Court of Yancheng Economic and Technological Development Zone in Jiangsu Province sentenced Chen to eleven years in prison for organizing and leading pyramid scheme activities, and imposed a fine of 6 million yuan; the other defendants were sentenced to prison terms ranging from eight years and eight months to two years, and fines were also imposed. The illegal gains were confiscated and turned over to the national treasury. After the first-instance verdict, Chen and others appealed. The Intermediate People's Court of Yancheng City in Jiangsu Province ruled to dismiss the appeal and upheld the original judgment.The People's Court imposed corresponding penalties based on the position and role of the organizers and leaders of the cross-border online pyramid scheme activities in the entire criminal chain, and legally confiscated the involved virtual currencies such as Bitcoin, cutting off the defendants' economic ability to commit cross-border crimes again, demonstrating the judicial authority's firm stance in safeguarding internet financial security and maintaining the stable and healthy development of the financial market order.
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