Guizhou Economic Investigation: Beware of criminal risks arising from virtual currency "mining" activities

In recent years, the "wealth-making myth" in the currency circle has brought virtual currency into the vision of more people, and has also attracted many players to the "mining" link of virtual currency transactions. On September 24, 2021, the National Development and Reform Commission, the People's Bank of China and 11 other departments jointly issued the "Notice on the Rectification of Virtual Currency "Mining" Activities". The notice clearly stated that virtual currency "mining" is an outdated technology and does not have a positive driving effect on industrial development and scientific and technological progress. Virtual currency "mining" activities will be fully regulated and cleaned up. "Mining" activities themselves have great criminal risks, and the public needs to pay more attention and take precautions.

Related concepts of “mining”

Virtual currency "mining" is to use the computer CPU and graphics card to run a special algorithm to calculate a solution that meets its specific rules. This solution is a virtual digital currency. Its essence is to generate a new block, and then encrypt and package the newly generated block with the original block together to form the so-called encrypted digital currency. In this process, the maintenance of the virtual currency platform will give some rewards.

Criminal risks arising from “mining”

(I) Organizing and leading pyramid schemes. Bitcoin and other virtual currencies are becoming increasingly popular, and their prices are rising. Many people want to get rich through "mining," and more and more people are mining. However, most people don't know much about mining, and many criminals take advantage of this information asymmetry to attract some people to join their organizations with the concept of "mining" or "mining machines," and develop a certain level of connections, constantly develop downlines, and organize and lead pyramid schemes.

(II) Illegal fund-raising crimes. Some criminals, without any qualifications, under the pretext of investing in "mining" or "virtual currency", encourage investors without professional knowledge to purchase different shares on the pretext of high returns or principal and interest guarantees, thus committing illegal fund-raising crimes.

(III) Crimes that damage computer information systems. Taking Bitcoin as an example, the core of Bitcoin lies in the key, which is the certificate in the blockchain that identifies the user as holding Bitcoin. Once the key is lost, the virtual currency becomes a "dead currency" and is lost forever. Criminals, knowing that others hold Bitcoin, often use hacking methods to remotely crack computers and steal Bitcoin keys legally held by others to commit crimes that damage computer information systems.

(IV) Fraudulent crimes. The get-rich-quick effect of Bitcoin is like a whirlpool, constantly attracting investors who do not understand blockchain technology to join. Criminals take advantage of investors' information blind spots and build overseas platforms that promise to provide RMB and virtual currency exchange services. After harvesting a certain amount of "leeks", they shut down the platform and cash out; or they provide fake blockchain virtual currencies that can be exchanged with Bitcoin or RMB. This behavior is often suspected of fraud.