After 3 Years, China Cracks a Major USDT Cryptocurrency Pyramid Scheme Involving Over 100 Million Yuan and More Than 100,000 Members

The People's Court of Dantu District, Zhenjiang City, Jiangsu Province, China, recently delivered a verdict on a case involving Mr. Wang's organization and leadership of a pyramid scheme, with the amount involved exceeding 100 million yuan. This marked the conclusion of a three-year case, with Mr. Wang being the first individual in Zhenjiang to be sentenced as a "red notice" fugitive. It is reported that the scheme attracted over 100,000 registrants.

In March 2021, the Public Security Bureau of Dantu District in Zhenjiang discovered a cryptocurrency platform suspected of network pyramid selling. Investigations revealed that in June 2020, Mr. Wang, Mr. Chen, and Mr. Li met in Malaysia and during a meal planned a joint investment in a cryptocurrency exchange project. They agreed to operate it as a pyramid scheme and registered a corporation for external promotion, assigning roles among themselves after reaching a consensus.

Mr. Wang was responsible for the project’s financial and market value management and the technical team; Mr. Wu led the technical team, handling technical development and platform maintenance; Mr. Chen was in charge of community promotion; Mr. Li handled the project’s publicity and planning, developing and promoting the cryptocurrency.

Chinese media reported that the scheme's leading officer, Captain Hu, explained: "This pyramid selling platform developed an app where members could buy virtual tokens developed by the project organizers using virtual currency (USDT), and then pledge them on the platform. Members would earn a static income from staking, and dynamic income from recruiting downstream members, which included rewards like referral bonuses and community performance bonuses."

He added: "The platform encouraged members to continuously expand their teams to gain more rewards. The more members they recruited, the more rewards they received. The platform lacked a genuine 'hematopoietic' function and practical application, relying solely on new members' funds to cover the high returns promised to earlier members, making it a typical pyramid financial scheme."

In August 2021, the Dantu police special task force traveled to various locations to arrest suspects, capturing 12 individuals involved, including Mr. Chen, Mr. Wu, and Mr. Yang. All suspects were subsequently sentenced. However, the main suspect, Mr. Wang, had fled abroad and had not been apprehended.

The Dantu police never ceased pursuing Mr. Wang. In 2022, he was officially placed on a red notice by Interpol, and the Zhenjiang police continued to persuade him to surrender. Finally, in May 2023, Mr. Wang returned to China from abroad and turned himself in. In April 2024, he was formally sentenced.

The virtual tokens issued by the platform were listed on various cryptocurrency exchanges and promoted as having broad prospects, continuously attracting members to purchase them. Meanwhile, the project organizers profited significantly by selling the original tokens in the background. By the time the case was exposed, the platform had registered over 100,000 members and the amount involved exceeded 100 million yuan.

The police caution that with cryptocurrency investment projects, it is essential to be vigilant and not be blinded by high returns, which could ultimately lead to significant losses.

It is worth noting that although Hong Kong has successfully approved spot ETFs for Bitcoin and Ethereum, awaiting the listing of related assets by leading Chinese fund subsidiaries in Hong Kong, Bitcoin and crypto mining activities remain prohibited in mainland China, with no lifting of the ban in sight.