Be wary of the cracked case of virtual currency pyramid scheme Shanghai 100 million yuan

As an old-fashioned event with a history of more than 30 years that has frightened countless counterfeit and shoddy manufacturers, 3.15 once again successfully brought together “Secret of Female Anchor”, “Jade Live”, “Sauerkraut”, “Primary School Student Lottery Scam”, etc. in one breath this year. Sending hot searches has contributed to further standardizing the market and prospering the economy.

Although it is not as eye-catching as the anti-counterfeiting party, the Shanghai Public Security Bureau also held a press conference on March 15, and officially disclosed to the society a case of virtual currency online pyramid selling involving more than 100 million yuan . It has been half a year since the official release of the “Notice on Further Preventing and Disposing of Hype Risks in Virtual Currency Transactions” (hereinafter referred to as the “9.24 Notice”) that caused the earthquake in the currency circle. The case indicates that China’s public security organs will focus on further cracking down on currency-related crimes in the next step .

So, today, Sister Sa’s team will talk to you about how virtual currency is related to the crime of organizing and leading pyramid selling activities. I hope that all the partners in the currency circle and those who are concerned about the blockchain will be vigilant about currency-related pyramid schemes and avoid being imprisoned. .

Shanghai virtual currency pyramid scheme

On March 15, the Shanghai Public Security Bureau held a press conference, at which the Shanghai Public Security Bureau disclosed the first case of using virtual currency to implement online pyramid schemes in Shanghai. After the six-month investigation, the Shanghai police gathered the Internet in Beijing, Shanghai, Hainan, Shaanxi, Sichuan and other provinces and cities. So far , more than 10 criminal suspects have been arrested, involving more than 100 million yuan . It is a rare major case involving currency in my country since the 9.24 notice was issued.

According to the Shanghai Public Security Bureau, since June 2020, the criminal suspect in this case, Mou Mou, used the network platform he actually controlled and set up overseas to set up a blockchain technology company to set up IT, with In the name of promoting blockchain technology and providing virtual currency value-added services, 5 teams, including single lecturer, promotion, customer service, and financial withdrawal, have made public commitments to the unspecified public on the Internet: (1) High static income; (2) Development of offline and double-entry remuneration . Attract a large number of investors to participate in its project.

In actual operation, the platform will first induce members to buy a large amount of virtual currency (suspected USDT), and then exchange the virtual currency for at least 1,000 tokens issued by the platform itself as the member’s ” entry fee “. For this entry fee, the platform will pay Members commit to a certain amount of static benefits. But in fact, static income only accounts for a very small part of the platform’s user income, and even many users just got a bad check, which has never been cashed. The real benefits are achieved by users through the development of offline and pulling people. In order to induce users to develop offline, the platform has set up various direct push awards, indirect push awards, team income and other rebate awards to continuously expand the level and organization scale.

This is a typical pyramid scheme. In addition to using virtual currency as a gimmick, it even uses very traditional routines in criminal methods. Mou Mou, the leader of the platform, has set up 5 lecturers and a group of “salesmen” including Zhou, who will conduct publicity through various online financial management courses, offline receptions, lectures, community promotion, and WeChat QQ group chats. and other common methods of pyramid selling, declaring to users that his virtual currency project is a ” unicorn in the field of global applications “, and that the blockchain built by his platform is the ” fastest public chain in the world “… Repeatedly implying that his project itself and all The issued tokens have great room for growth and appreciation.

According to the rules of the platform involved, each time a member pulls a head, he can immediately get a certain percentage of the user’s paid token amount from the platform as a direct push reward. If the offline user continues to develop the next level of offline, he will also receive an indirect referral reward . Members can also upgrade their level according to the accumulated amount of tokens paid by offline customers. Depending on the number of offline customers, they can also receive team income rewards ranging from 10% to 100%. According to the information disclosed by the Shanghai Municipal Public Security Bureau, the platform involved in the case has accumulated about 60,000 member accounts since its establishment until it was investigated, with a maximum of 72 levels of hierarchy . Although compared with the 3,000 layers of Plus Token’s cross-border virtual currency network pyramid scheme in 2019, it is insignificant, but in the context of banning virtual currency transactions and implementing strong regulatory policies on various virtual assets in recent years, it has become a Rare case.

The past and present of MLM

MLM is born out of direct selling. Direct selling refers to selling products directly to end consumers through door-to-door sales by agents and consultants. The agent does not get wages from the employer, but takes a cut of the single product sold. The employer also Save advertising costs, shop rent and other costs. Therefore, direct selling is more cost-effective for cosmetics, health products, jewelry, home appliances, and insurance. The well-known “Xu Li” (even now synonymous with good product recommendation) is the first batch of direct-selling brands in my country. In general, direct sales through sales commissions are not illegal or criminal acts only for the purpose of selling goods . The real danger is the pyramid selling that was born out of direct sales.

MLM originated in the 1920s in the United States. In 1954, a large number of multi-level marketing models appeared in California, the United States. This multi-level profit-making sales model born out of direct sales was originally called ” pyramid sales “. This sales model was called the “Rat Club” after it was introduced to Japan in about 1970. At that time, the most famous MLM in Japan, the “One World Family” Rats Club gathered more than one million people before being investigated, which shows the horror of MLM. .

In the 1990s, with the acceleration of my country’s reform and opening up process, the economy of the southern coastal areas began to take off, but at the same time, it also breeds the soil of various economic crimes. In 1989, a Japanese MLM health care product company first entered Guangdong and established the “five-level three-level system” MLM organizational structure to make money; in 1990, an American cosmetics company was registered in my country and obtained a business license to carry out MLM business. .

Due to the lack of understanding of my country’s law enforcement departments at that time, they did not severely crack down and supervise them, and various MLM companies that could not survive overseas found new opportunities in my country. It is said that all kinds of “lecturers” could be seen in the streets and alleys of Guangzhou back then.

MLM is essentially a behavior that promotes mutual erosion among group members, and does not produce any economic benefits. Only a few people at the top of the pyramid can really benefit from MLM . When the harm of pyramid selling gradually became prominent, in 1994, the State Administration for Industry and Commerce successively issued Circular No. 223 “Notice on Suppressing Illegal Behaviors of Multi-level MLM Activities” and Circular No. 240 “Notice on Investigating and Punishing Illegal Behaviors of Multi-level MLM Activities” and began to crack down on various types of pyramid schemes. Activity. After 1998, a large number of pyramid schemes began to collapse, which had a great impact on the social and economic order. In 1998, the State Council issued the “Notice on Issues Concerning the Transformation of Sales Methods by Foreign-invested MLM Enterprises”, which promoted and promoted the legalization of foreign MLM companies. Business transformation. In the same year, the State Administration for Industry and Commerce issued the “Notice on Prohibiting Illegal Behaviors of Multi-level MLM Activities” to crack down on MLM.

In order to better combat pyramid schemes, in 2009, the Seventh Amendment to the Criminal Law passed by the Seventh Session of the Standing Committee of the Eleventh National People’s Congress added the crime of “organizing and leading pyramid schemes”. According to Article 224-1 of the “Criminal Law”, the crime of organizing and leading pyramid selling activities refers to organizing or leading the business activities such as selling goods and providing services, and requiring participants to pay fees or purchase goods or services in the name of business activities. and other methods to obtain membership qualifications, and form tiers in a certain order, directly or indirectly use the number of development personnel as the basis for remuneration or rebates , lure and coerce participants to continue to develop others to participate, defrauding property, and disrupting the economic and social order of pyramid selling activities.

According to the provisions of Article 78 of the “Regulations on the Standards for Filing and Prosecution of Criminal Cases Under the Jurisdiction of Public Security Organs (2)” issued by the Supreme People’s Procuratorate and the Ministry of Public Security, organizers and leaders of pyramid selling activities who meet all the following requirements shall file a case for prosecution:

  1. Organizations and leaders, in the name of business activities such as selling goods and providing services, require participants to obtain membership qualifications by paying fees or purchasing goods and services;
  2. to form hierarchies in a certain order;
  3. Directly or indirectly using the number of development personnel as the basis for remuneration or rebates, enticing or coercing participants to continue to develop others to participate, defrauding property, and disrupting economic and social order;
  4. There are more than 30 people who are suspected of organizing and leading pyramid selling activities and the level is above the third level.

As far as the Shanghai virtual currency pyramid selling case is concerned, first of all, in the name of promoting blockchain technology and providing virtual currency value-added services, members are required to pay more than 1,000 tokens to obtain membership. Secondly, the real profit model of the platform members does not lie in the static income of the token, but in the dynamic rebate and team income generated by the continuous pulling of people, so as to induce the members to continuously develop and go offline, and the final members are far more than 30 people and 3 people. level or above . Accordingly, the actions of Mou and others are likely to constitute the crime of organizing and leading pyramid selling activities.

write at the end

Since the Shanghai Public Security Bureau has not further disclosed the progress of the case, the case may be at the conclusion of the investigation and has been transferred to the procuratorate for review and prosecution or the court for trial. The detailed information is still unknown. Under the background of the 9.24 notice, China’s public security and law enforcement agencies have begun to increase their efforts to crack down on various criminal activities involving virtual currency. Partners must keep their eyes open to avoid criminal risks and prevent themselves from becoming victims of crime in their daily operations. the person .

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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