It's not just Beijing, Shanghai, and Guangzhou that are absurd: virtual currency is ripping off a small county town for 350 million yuan

Zhao Yiyi has been busy collecting debts recently. At the end of last year, he rushed back to his hometown from Beijing to withdraw the 300,000 yuan that he had deposited with his parents. The money should have been deposited into his account long ago, and together with other savings, it could barely make up the down payment for buying a house in Beijing.

When he returned home, he found out that all his parents' money had been defrauded as early as 2020, and they still owed a lot of loans. But his family had kept it a secret from him for the past two years.

When Zhao Yiyi and others working in Internet companies were still cramming their knowledge of digital currency, they did not expect that people thousands of miles away, in the hidden corners of the sinking market, had already been exposed to virtual currency earlier. However, it was in a heartbreaking way.

Zhao Yiyi's hometown is in Suichang County, Zhejiang Province. In this small county with a permanent population of less than 200,000 and a mountain range running through it, residents may not be able to explain what the Internet is, and have never heard of terms such as Fengkou that are common in first-tier cities, but almost everyone knows about the cryptocurrency circle.

Is this a passing scam?

No, such scams are still happening. In the second half of 2022, a 36Kr employee received a consultation call from his parents in his hometown in the county: Have you heard of web3? People around me recommended playing a virtual currency, where you can get coins for free first and then exchange them for money. Can you join?

This phone call was the origin of our investigation.

Then we found the case of Suichang County. An organization called "Position Management (hereinafter referred to as Position)" made "cryptocurrency speculation" popular in Suichang County and its surrounding villages, allowing the elderly who could not use smartphones, cleaners who had not even graduated from elementary school, and retired high school teachers to invest their life savings in a virtual currency trading app called "Mark". According to spontaneous statistics from investors, more than 6,000 people in the entire Suichang County and 11 surrounding villages were siphoned off more than 350 million yuan.

Over the course of several months, 36Kr visited the urban area and all villages in Suichang County during the epidemic. Taking it as a representative case, we first hope to clarify how such a scam happened step by step. Then, we hope to spread this information and hope that as many people as possible will not step into such a scam again.

The soil of fraud

At 4:30 in the morning, a silent thunderbolt sneaked into Yin Zhewei's mobile phone.

All his money was gone. But he had confirmed it just two hours ago.

At two o'clock in the morning, he opened the "Mark" App developed by "Touchang", and more than 100,000 yuan was quietly lying in his account. Yin Zhewei stared at his phone and fell asleep with peace of mind.

Two and a half hours later, he suddenly woke up, and a voice in his head urged him to check his phone. He entered the password skillfully, but found that he could not log in.

In Yin Zhewei's mind, there was a bomb that could explode at any time. At this moment, with a "bang", it finally exploded.

There was still more than an hour before dawn, and most people were still asleep. But soon, when people began to wake up, they would find that everything had become a foregone conclusion - everyone's money had disappeared.

The pain of Suichang County broke out on October 17, 2020.

At 8:30 in the morning, Luo Chunhua, a female worker at a garment factory, habitually opened her mobile phone to log into "Mark" to check whether the rebate of more than 100,000 yuan of principal in her account had arrived. The app could not be opened, and Luo Chunhua initially thought it was a network problem, but then she received a text message from a co-worker, saying that their account could not be opened either.

Luo Chunhua was absent-minded and her head was buzzing all day. Her husband didn't know that she was investing in a position. The money was the savings of the couple's life-long work, used to support their daughter's education and also as her daughter's dowry.

After getting home from get off work, Luo Chunhua told her husband the truth. "Pa!" Luo Chunhua was slapped hard on the right side of her face. Her husband asked her, is that all the money? Then she was slapped on the right side of her face again, and this time she was knocked down on the bed. "Didn't you consult me ​​before you took the money and did something stupid?"

The next day, Luo Chunhua did not go to work. She went to the office rented by Zhou Xueting, the director of the position, in the hotel. The director patted his chest and said, "Don't worry, this money is a loan from you. Even if I go to work, I will pay you back." Luo Chunhua was a little relieved, but she did not expect that Zhou Xueting and her family would disappear soon after.

"You are sick!" More than ten days later, seeing that "Mark" still hadn't recovered, Yin Zhewei called his director and asked whether the position manager had run away. The director asked back, "Are you sick? Such a big company, with so many civil servants and big bosses' money in it, how could it run away? It has changed platforms so many times before and nothing happened, why are you so anxious?"

This is also true. Because of the "sensitive nature of digital currency", the position had changed apps several times before, and the exchange was not accessible for several days, so many people still did not think much about it this time.

Li Tupei, who invested one million yuan (and was one of the people who suffered the most in Suichang County), had worked for two direct sales companies, Amway and Tianjin Zhuyuan. Li Tupei also felt a little uneasy that day, but after the comfort of the director, he finally relaxed.

(A position investor's mobile trading page, photographed by a 36Kr reporter)

There is another unspoken reason for everyone’s slow reaction—many people, such as Yin Zhewei, realized from the beginning that “something was not right” with the position platform, but they firmly believed that even if they were facing a group of scammers, they would be the first to withdraw.

This is not the first time they have made money from this kind of app.

Before the positions entered Suichang, various pyramid schemes and fake order gangs had already reaped the profits in this small town. In the myriad illegal fund-raising activities, many people made money and got used to seeing "those people" coming and going.

Suichang County is not very big. It only takes more than ten minutes to walk from the county government on North Street to the "Interesting Western Restaurant" on South Street, but along the way you will pass by a bustling commercial street, a European-style high-end residential area, and an ancient stage. This stage hosts activities for important festivals such as the Spring Festival temple fair, the Dragon Boat Festival and the Mid-Autumn Festival. During every major festival, there are "opera troupes" to watch here.

Like many developing counties, this land is both classical and prosperous, occasionally switching modes. But only after living here for a while, you will vaguely feel some uneasy tension. Although it is located in a county, it is full of gold mines and tea fields. Locals have been doing business for generations, and many of them have already done business abroad. In recent years, the real estate boom has also swept Suichang, and the rich real estate has created real estate developers, speculators, and a large number of demolition households.

Here, a house near the train station costs several million yuan. The air is filled with the smell of sand from construction sites, just like the first-tier cities ten years ago - high-rise buildings are everywhere. Some newly built real estate projects in the county town are sold out within two months at a high unit price of about 15,000 yuan. Even in the villages under Suichang County, newly built high-rise buildings can be sold for more than 10,000 yuan per square meter.

Many people who became rich due to demolition moved their families to more developed places such as Hangzhou. And more people in Suichang who were content with their modest wealth began to study financial management and gambling. Mahjong is the most common pastime, and people here play it more "big", and the winnings and losses of a hand may be "just one or two red bills".

Many local residents who have been relocated rely on bank interest for a living, and some bolder ones lend their money to private lending organizations, which in turn give them very high interest rates.

Easy-to-get money can be addictive. A woman told 36Kr that she casually gave 30,000 yuan to someone else as a “bridge” and got back 38,000 yuan a week later. “(The interest) was enough to cover the cost of playing mahjong for a few nights, as I had bad luck those days.”

Brushing orders has been popular here for the longest time and was once the most popular way of playing. Brushing orders in Suichang refers to some "investments" that require the development of downline, which is essentially no different from pyramid schemes. When "brushing orders" was at its most rampant, almost everyone in Suichang County and several villages under it had several "money-making apps" on their phones.

Loan sharking, pyramid schemes and fake orders have been prevalent for many years, so many people have already recognized the "essence" of them. But this time, it seems that a more "advanced" and "scientific" new way of playing has arrived: investing in virtual currency. Many people have been told that "this is an asset that the elites in big cities are speculating on, and it is an unprecedented way to make money."

Those who dreamed of making a fortune put all their money on the line, as if this was an unprecedented investment and that they would miss the opportunity if they were a little later.

“It is possible to lose money in pyramid schemes, but not in virtual currencies. Countless people in Beijing and Shanghai have made a lot of money from them. These are facts that can be verified in the news,” said a resident of Suichang County who was interviewed by 36Kr.

This new organization is “Touchang”. In the fog, since 2018, a new force has gathered in Suichang County.

First step to take the bait

In March 2020, a man dressed like a country bumpkin appeared at the sales office of Xiangsheng Hetai Guanlan Mansion in Suichang County. The marble floor, crystal chandeliers and fountain at the door of the sales office all exuded a luxurious atmosphere, which was out of place with this man who was less than 1.6 meters tall and a little fat and wearing an old suit.

This is one of the top residential areas in the area. It is built by the river and is considered a "quasi-luxury home" by most people in Suichang.

This man named Mao Yizhen was one of the most heavily indebted people in Suichang. Ten years ago, Mao Yizhen, who was working as an insurance salesman, felt that "the money came too slowly" and quit his job to start a business of "recruiting people" and "helping people to place orders". When the "direct sales" model was most popular, he even opened several offline stores, but those stores did not make money and Mao Yizhen owed a large amount of debt.

How did this famous "down-and-out man" suddenly become rich and buy a luxury house? Mao Yizhen's story quickly spread in the small county: it turned out that it was because he met a man named Liu Guanhua, who was absorbed into an organization called "Touchang" to do virtual currency business.

No one knows how Liu Guanhua and other position managers learned about the concept of virtual currency. Perhaps, as rumored, the founder of the organization was a "successful person" who had developed in Beijing and Shanghai and made his first fortune in the currency circle. But it is more likely that it imitated the "Jiujiu Community", the originator of virtual currency brush trading, which once swept first- and second-tier cities with "15 to 20 percent profit every month, only profit and no loss".

Ultimately, the position ignores the positive significance of virtual currency in the field of science and technology and directly magnifies one characteristic - virtual currency is not protected by law.

In Suichang County, which covers an area of ​​less than 3,000 square kilometers, people in Suichang started to have a dream of getting rich quickly, influenced by Liu Guanhua, Mao Yizhen, and layers of position managers. In the dream, some people made money to cure their fathers who had cancer, some got rid of the hard labor of bricklayers, and some moved from tile houses to villas...

As wealth stories spread repeatedly, people quickly became addicted to the virtual currency model promoted by the positions - and nightmares began one after another.

Li Tupei’s nightmare originated from a visit.

This was the seventh time that Fang Jun, the director of the position, came to Li Tupei's home. In the previous six times, Li Tupei hid at his friend's house to avoid him. When Li was doing direct sales at Tianjin Zhuyuan, Fang Jun was his colleague, and both of them made a lot of money.

This time, Fang Jun and Liu Guanhua drove nearly 100 kilometers to come here, and finally persuaded his wife to join the "virtual currency speculation army." The latter invested 100,000 yuan on the spot. Later, Li Tupei gradually increased the investment to 1 million yuan.

Before deciding to invest, Li Tupei visited Liu Guanhua's office, which was a beautiful house painted white, and everything was fashionable and high-end. Two offices of more than 80 square meters were connected, and they were filled with enthusiastic directors. In front of Li Tupei, everyone described with passion how they had "made a fortune" from their positions and how they regretted not meeting each other earlier.

But only "big investors" like Li Tupei can get such treatment. More investors join the position because of the "meetings" again and again.

At first, many people went to the "conference" just for a little bit of profit. These meetings were often held in luxurious hotels that villagers would not have been willing to spend money on before. In addition to free food and drinks, they also received laundry detergent, rice, flour, grain and oil.

That was also the first time Jin Qiaoqiao heard about virtual currency. Position managers constantly used Bitcoin as an example, describing positions equivalent to Bitcoin as "the future of the national economy" and "an investment that will appreciate 100% in value."

"They said that virtual currency and digital currency are supported by the state," After returning home, Jin Qiaoqiao borrowed a friend's computer and carefully checked the information on the Internet for several days. She found that the "Bitcoin" mentioned by Liu Guanhua really appreciated rapidly, and "the state also really issued a document claiming to support virtual currency."

After the platform collapsed, Jin Qiaoqiao was upset and thought, "The fraud organization is too rich, and Baidu (the entry) has also been bought by them."

The people on the stage talked enthusiastically, and the people below ate heartily. Every conference was unprecedentedly grand. Retired teacher Tang still remembers that the high-end hotel had imported red wine, freshly squeezed juice, and rich dishes, including pork elbows and seafood. Everyone ate heartily, which also left them with the impression that this group was "really generous."

In order to attract more people to participate in this project, Toucan also continues to hold gift-giving conferences in Suichang.

The meeting in February 2020 was chaired by Liu Guanhua's superior, Yin Chunxiang, who was also the "head" of the Tou Can Group. Even in the first month of the year, the number of participants in this conference was unprecedented. Villager Luo Chun recalled that the meeting was arranged in a large hotel conference room of about 400 to 500 square meters. Every chair was covered with white silk, which looked very formal. The conference room was packed with people, and those who could not sit down stood densely at the door.

Even though many people originally only planned to listen to the two-hour "how to get rich" lecture, receive a gift and leave, after the conference, they were tempted.

Three types of people, three ways of persuasion

Huang Yuanying still doesn't understand, "The account is mine, the password is mine, how could the money in it be transferred away by someone else?" It's like she still can't figure out what she is involved in and how she was "tricked" into joining.

If the gift-giving conference is the first step to attract people to the game, then after the lengthy and expensive preparation, it is the turn of potential investors attending the conference to "give back" real money.

Next you will see how position management gradually brings everyone into the pocket.

The directors and group leaders are the easiest to win over, as they have usually been involved in direct sales (MLM) - according to some directors, "most of them know what they are doing, but they think they will get out before the thunderbolt." They are usually "directly" found by leaders such as Liu Guanhua and Mao Yizhen.

Becoming a director means that every time you recruit someone, you will receive a generous commission. Therefore, many directors do not invest much themselves, but are good at "organizational construction and team expansion."

If the directors want to achieve their KPI, they need to first attract "big users" with funds. For example, Li Tupei, who eventually invested more than one million, once "successfully", it is equivalent to attracting 10 ordinary downlines.

When dealing with big money sponsors, advocating the high returns of virtual currencies is obviously an attractive option. This is also the closest to the basic logic of cryptocurrency speculation.

According to position directors such as Fang Jun and Zhou Xueting, the "cryptocurrency speculator" Li Tupei needs to first purchase a huge amount of MKC virtual currency and then become a member of the "position management team."

Liu Guanhua promised that "the platform will have special organized behind-the-scenes operations to manipulate the rise and fall of MKC virtual currency, allowing big investors to make enough money."

This is a bit like the model of illegal insider trading - transcending or even changing the rules to reap all the dividends, which is also in line with the values ​​of some wealthy people.

According to the position manager, the stock market was operated in this way before, but now only virtual currency can be "played" in this way - this did help Li Tupei to understand. However, he did not think carefully about why the position should make him money if the internal transaction was so easy.

For a moment he felt that he seemed to understand what virtual currency was, but when he thought about it again two years later, the middle-aged man shook his head in frustration and said, "I don't understand it. I'm confused and I can't explain it clearly."

Even for most residents in Beijing, Shanghai, Guangzhou and Shenzhen, the concept of virtual currency seems too complicated and mysterious.

The only thing Li Tupei could understand was the operation steps, "Just like the stock market, each transaction requires a 50 yuan operation fee." But when asked about the trend of well-known currencies such as Bitcoin and Dogecoin, Li Tupei said, "I don't know, and there is no need to study. They promised that the loss will be theirs."

Of course, he didn't know that those so-called "exchanges" and traders were all created by the positions themselves and did not really exist. Li Tupei thought he was harvesting retail investors, but in fact he was the one being harvested.

When faced with investors who have spare money but not much, the directors will switch to another way of attracting them. Jin Qiaoqiao and Teacher Tang were both classified as this type of investors by the position, and the latter's goal is to "squeeze" at least 100,000 yuan from them.

36Kr watched a live video of an investor conference provided by Mr. Tang. The group's "boss" Yin Chunxiang's speaking ability is indeed good. She compared virtual currency to "the next Alibaba" and "the next Internet." Yin Chunxiang in the video was in high spirits and her voice was very penetrating - she said that there was no express delivery industry before the rise of e-commerce, and there were no food delivery workers before the rise of Meituan and Ele.me. What Toupiao is doing now is to create a new job opportunity for everyone when virtual currency rises, virtual currency operators.

That’s right, when it comes to “middle” investors, Position compares participating in virtual currency trading to a job opportunity.

Jin Qiaoqiao recalled that Fang Jun told her that she only needed to buy when the currency value was low and sell when the currency value was high. This operation was called "virtual currency maintenance."

The position packaged this as a "part-time job of brushing orders for digital currency". It only required working once every four days, buying and selling according to the prescribed operations - and the income obtained by Jin Qiaoqiao's investment was called "salary".

In a recording, Fang Jun once guaranteed that there was no risk in doing this and that the principal would be 100% guaranteed. The essence of "virtual currency maintenance" is to attract more leeks to the platform, and investors use their own money to place orders and earn stable commissions. The rise and fall of the currency price will not affect the income of the order-placers, and no one will lose money.

In Jin Qiaoqiao's opinion, she does not participate in cryptocurrency speculation, as the risk is too high. She just invests money to "do a job". "We help the exchange to increase traffic and popularity, and other investors will come in."

In the minds of "intermediate" investors, positions are digital currencies, and they may become the next Bitcoin - this is of course inaccurate, as positions confuse the platform with Bitcoin itself. Their favorite examples are those that are easy to check online - an old lady once bought Bitcoin for 2 yuan, and "now one Bitcoin has risen to more than 100,000 yuan." In other words, investment positions will also have tens of thousands of times of gains in the future.

Finally, people like Huang Yuanying who have relatively low incomes in the local area will not be spared. At this time, the head position will send directors with local accents and decent identities who claim to be middle school teachers, civil servants' wives, retired doctors, etc. to lobby. Once the persuasion is successful, they will use the name of rebates to encourage all relatives and friends around them to come out and meet.

Huang Yuanying was brought out by her good friend. When they first met, she was very touched by the concern of the director. When he heard that Huang Yuanying worked hard in the factory every day and worked part-time as a nurse in a nursing home, the director's eyes were red, and he held Huang Yuanying's hand with heartache, "We are all human beings, why do you have to live so hard? Your parents didn't give birth to you to suffer in this world."

Then, the director briefly introduced the position, but only mentioned the virtual currency in two or three sentences. In the director's words, all Huang Yuanying needed to do was to use money to help the platform to place orders - this is an area that county people are more familiar with. In fact, two years later, when recalling the original conversation, Huang Yuanying could not remember a word about the position and virtual currency, "Anyway, it was all high-tech stuff."

The information she heard was that everyone else in the county had made money on their positions, including her colleagues and friends, and that "the principal can be withdrawn at any time, just like a current account in the bank." What impressed her even more was that as long as she took out 30,000 yuan (almost all her savings), "you can use the money you earn to buy an air conditioner this summer, and you won't have to sleep at night because of the heat."

The 66-year-old woman was finally moved by the words "elderly care" and "air conditioning". Accompanied by the group leader, she bought the cheapest smartphone, downloaded the app, bound her bank card, and topped up money to enter the platform, all in one go, and she finished everything in half a day.

New concept, reincarnation

On the eve of the crash, the position showed unprecedented madness. In September 2020, there were three or four meetings of varying sizes every week within the position, encouraging the directors to pull down the line even more frantically.

After the explosion, Liu Guanhua and Mao Yizhen surrendered themselves. According to a previous notice from the Suichang County Public Security Bureau, Liu Mouhua and others lured investors to register as members in the name of speculating in virtual currency, and constantly induced them to develop downlines, suspected of organizing and leading pyramid selling activities. On November 5, Liu Mouhua and others were criminally detained in accordance with the law.

The losses in Suichang County are just the tip of the iceberg. According to media reports, this pyramid scheme, which used "position management" as a gimmick, illegally obtained a total of more than 180 billion yuan across the country - this is close to half of Baidu's total market value.

If this was a startup, it would undoubtedly be very profitable. But when you understand the full story, you will find that this is a crude scam.

After the incident, many directors and executives of Suichang County absconded with the money. Some villagers found out that they had established a new pyramid scheme in Hangzhou. Some people, such as Luo Jinhua's director Zhou Xueting, chose to surrender because they were repeatedly asked to pay back their investment funds. In the end, the court sentenced her to three years in prison and suspended her sentence for three years. In the midsummer of 2022, Luo Jinhua accidentally ran into Zhou Xueting taking her daughter for a walk in the community garden. She rushed over and asked the other party to pay back the money, but Zhou Xueting asked back, "The court didn't ask me to pay back the money, so why should I pay it back?"

The lives of the directors have not stopped, but the scars left on Suichang County continue. To this day, when the villagers get together, as long as someone mentions "that day", someone will secretly feel sad.

Recalling their experiences of being deceived, most of the interviewees were like Jin Qiaoqiao and Luo Chunhua. They either felt that they had seized the bonus period of digital currency, or were fortunate to have found a good way to make money. Almost everyone was living in the dream woven by the position group leader.

After the dream is shattered, there is a lasting sense of despair.

Li Tupei suffered heavy losses. Of the 1 million yuan investment, only a few hundred thousand yuan was the couple's savings, and the rest of the investment came from real estate and online loans. In order to invest, Li Tupei mortgaged the house left by his father, which was an asset he and his three brothers and sisters jointly owned. After the incident, his family helped to pay off the mortgage loan, and Li Tupei breathed a sigh of relief. But the online loans still had to be repaid, and to this day, this middle-aged man is still endlessly repaying the usurious interest.

Li Tupei no longer likes to go out. But his circle of friends is still active, chattering about probiotics, anti-aging and other health products - these are the resources he accumulated when he was doing direct sales before investing in positions. For Li Tupei, returning to his old business may be the best way to repay his debts.

Some time ago, Huang Yuanying saw a friend who was also cheated often carrying a basket of fruits and selling them at the bus stop at the entrance of the village. Huang Yuanying decided to go to the wholesale market herself and do some small business while working.

Zhao Yiyi is actively defending his rights, paying close attention to court announcements, and using his connections to track down the directors who cheated his parents out of their money. He is determined to buy a house and settle down in Beijing, "for the sake of future generations. Children who grow up in big cities may not be easily fooled."

The old rights protection movement has not ended yet, but Suichang County has entered the next cycle. The leaders left, and new organizations came.

In a group of several hundred people who were defending their rights, an app called "Crowdfunding" has become popular again. "Crowdfunding" is also called "pay back with money", and the promotional language is "stick together to pay off debts", even if a member owes millions, "everyone will help you pay it back together". In essence, members need to pay a membership fee of 600 yuan to join, and each new member will make a profit of 200 yuan. Many victims of positions have once again become loyal fans of "Crowdfunding".

During the three hours of the interview with 36Kr, a former position investor was not idle either. He developed two more "crowdfunding" members - Yin Zhewei and Luo Chunhua. A month later, Luo Chunhua told 36Kr that she refused to recruit people for the new platform. Yin Zhewei had already developed several new downlines.

Yin Zhewei was an active participant in this new organization. Even though he knew from the beginning that the new platform, like the position, did not sound like a serious business.

He was an envied demolition household. Even if he put all his money in the bank to earn interest, he could still live a comfortable life. He felt that he could watch from the sidelines and participated in many meetings on positions. Although he did not understand digital currency, looking at the people on the stage, "it looked like they were playing a game of pulling people together." In Yin Zhewei's words, it was old wine in new bottles.

But he still chose to invest 100,000 yuan because he believed that as long as he was not the last one (to withdraw), "there would still be profit."

By participating in the "crowdfunding", Yin Zhewei decided to take another gamble, "This time, I hope I can become the sickle."