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Reporter: Zhang Shuxin Editor: Wang Jinyu Source: Beijing News "This type of virtual currency fund is often a game of passing the buck after the initial users have tasted the sweetness and then recruit downlines in order to get more rebates, while the latecomers will lose everything. It's a game of passing the buck." Although DCEP sounds unfamiliar, the word "central bank" made retired Zhang Hua (pseudonym) choose to take a gamble.
While reading the news, a brainwashing promotional article attracted her into the "Central Bank International Wallet" promotion group, where she and more than 40 group members waited for the advertised "national encouraging rewards."
"I feel that 1.2 trillion is really a lot, I want to participate." The zero threshold of no capital investment made these people let down their guard.
A Beijing News reporter saw in a promotional article circulating in the WeChat Moments of middle-aged and elderly people that the advertising slogan of "Central Bank International Wallet" is very impactful: the promotion period is 18 months, the central bank will distribute dividends of 400 billion yuan, and as soon as the link comes out, it will be a money-grabbing operation!
This project also comes with a detailed promotion explanation, which directly calculates that according to the 2% promotion rebate, the personal net income can reach 160,000. Although it is just a pie in the sky, it is very tempting.
The reporter found that the "Central Bank International Wallet" was mainly promoted through WeChat Moments, and adopted a pyramid scheme-style "recruiting people", claiming that it could be promoted for three generations, and each level could enjoy 2% or 3% of the benefits. However, in the industry's view, with the central bank's digital currency (DCEP) being tested in Shenzhen, Suzhou, Beijing, Chengdu and other places, most of these projects are just taking advantage of the popularity and are virtual currency scams in old bottles.
It is worth mentioning that in order to get more rebates, this type of virtual currency fund group "crazily" develops downlines and continues to play the game of passing the parcel, and the elderly are becoming "prey".
The name of DCEP
"Distributing Trillions of Yuan" under the Banner of Central Bank Digital Currency
It is claimed that the net profit of joining the group can reach 160,000
"The country is going to issue a 'China Central Bank Digital International DCEP Wallet', a wallet with dividends that will change several generations of families. To put it bluntly, it is a wallet where the central bank releases dividends."
"We are still waiting for the exact launch date. The first release of dividends will be 400 billion + 800 billion."
"The wallet has currently connected with 6,700 physical enterprises"...
In the WeChat Moments of some middle-aged and elderly people, these tempting promotional slogans are highlighted in red and appear repeatedly. The Beijing News reporter easily joined the "Central Bank International Wallet" promotion group through the QR code in the promotional article. At present, there are more than 40 members in the group. The reporter learned from several group members that there are many retired people among them.
Zhang Hua is one of the elderly people. She told the Beijing News reporter that the reason she joined the promotion group was that she searched for news about the central bank's digital currency (DCEP) on the Internet and saw the promotion of the "Central Bank International Wallet". The huge reward of 1.2 trillion yuan was a good investment choice for her.
Another group member came across this project through a promotional article in WeChat Moments. “At the time, I thought that if I could get a few people to use this APP together and the government really gave rebates, I could make money.”
A Beijing News reporter found that the "Central Bank International Wallet" not only has a dedicated WeChat official account, but also has supporting promotion details, attracting investors with over one trillion yuan in dividends.
The 11-page promotional material details the profit-sharing system. In the name of national policy incentives, it claims that there are 1.2 trillion yuan in promotion incentive funds, including 400 billion yuan in China and 800 billion yuan abroad, with a limited promotion period of 18 months, and the project will end after the issuance. As for the profit method, it is not difficult to understand. You only need to register the "Central Bank International Wallet" on your mobile phone, and then go to the bank where you opened an account to open the DCEP payment function for the public account and bind it to the "Central Bank International Wallet". In the future, you can get bonuses by spending in the wallet APP.
This project claims that every DCEP income flow of an enterprise will enter the enterprise's public account, and 2% of the national dividend of the income flow will enter the "Central Bank International Wallet" of the corporate legal person.
To facilitate user understanding, the promotion details take company registration as an example. When selling goods in the future, invoices will be issued to downstream companies first, and downstream companies need to pay the company with DCEP. After the other party pays DCEP to the company's account to complete the transaction, the company's "Central Bank International Wallet" will receive a 2% bonus (20% after tax) from the central bank within 24 hours.
How much money can such a seemingly easy-to-win project make? The detailed explanation makes a calculation: the company's turnover is 10 million × 2% = 200,000, 200,000 × 20% = 40,000 in taxes, and the net profit can reach 160,000. The Beijing News reporter found that the main domestic promotion targets of this project are private enterprises, large businesses, etc., and all individuals and businesses abroad can participate without any restrictions, but the turnover bonus abroad is as high as 3%. In addition, the platform claims to be able to connect to online platforms such as Taobao, JD.com, Meituan, financial management, and insurance. Users can enter various platforms to purchase goods and pay through the "Central Bank International Wallet" to enjoy permanent bonuses.
"Crazy" pulling people
Promote in Moments to attract fans
Tiered remuneration: "Enjoy permanent dividends and pass them on"
Behind the huge investment returns is the "Central Bank International Wallet" model of attracting people. At present, for individuals, there are only two things to do: to prepare for the establishment of a group and to learn to forward information. Users promote through WeChat Moments and establish their own WeChat groups. When registering, users are required to register with their real names and complete their personal information.
After the Beijing News reporter joined the group chat, the group owner revealed that the "Central Bank International Wallet" is a software developed by the central bank, which is a livelihood project and state-owned. It is worth noting that the group owner repeatedly emphasized that you must download the APP according to the QR code she provided, and said, "Don't apply for the central bank's digital currency at any bank, don't do it, otherwise you won't get the rebate, and the bank will deduct the promotion fee itself."
In order to encourage more people to join, the project adopts a tiered compensation system, which is what the promotional materials call "the more users you lock in, the more passive income you will get." Users can make a profit as long as they participate in the promotion and invite others to download and register the "Central Bank International Wallet."
"I recommend it to you. After you use the QR code I shared with you to conduct a transaction, the state will reward me with 2% of your transaction volume. You recommend it to the next person, and the state will reward both of us with 2% of your transaction volume. This can be passed on three levels in total," the group owner told reporters. "The rewards are all given by the state. The more people you recommend, the more rewards you will get."
In the detailed explanation of project promotion, this is called three generations of promotion: A promotes B, B promotes C, C promotes D, and as long as D receives DCEP, ABC will all receive 2% profit.
The group leader explained the main promotion methods, and participants can share articles introducing the "Central Bank International Wallet" to their friends. She also provided a fixed line of speech: "All transaction channels remain unchanged, and the wallet is used to receive additional rewards. There is no capital investment, and there is no risk. This is a great thing that benefits the country, enterprises, and the people. It shoulders an important mission for the internationalization of the central bank's digital RMB, and also brings a rich promotion income to itself."
"After registering during the promotion period, users who use DCEP will enjoy permanent dividends and can pass them on!" The group leader told reporters, "This sentence must be brought up."
When asked by the reporter about the current progress of the project, the group owner said, "It has not yet been launched online, which means we cannot get any rebates. What we need to do now is to set up our own promotion group and invite more people to join. Once the website is launched, more people will be able to download it."
Tricks Analysis
The "0-shot" slogan is a psychological trick
Harvesting through certification fees, withdrawal fees, and coin issuance
The Beijing News reporter checked the relevant pilot policies of the central bank's digital currency and found no content about the "central bank's international wallet", let alone the so-called "bonus". As early as November 2019, the central bank issued an announcement emphasizing that the current online rumors of the issuance of so-called legal digital currency and the behavior of individual institutions using the name of the People's Bank of China to launch "DC/EP" or "DCEP" for transactions on asset trading platforms may involve fraud and pyramid schemes. The general public is requested to raise their risk awareness, not to be credulous, and prevent their interests from being damaged.
Su Jie (pseudonym), who previously worked at a virtual currency exchange, told the Beijing News that such projects are free-to-use and claim that users can make profits by registering and promoting. However, users often need to fill in information such as their mobile phone number and bank account, and should guard against the risk of related information leakage and the resulting property loss.
Su Jie said that "0 investment, 0 threshold, 0 risk" is often the slogan of such projects. The previously exposed Qubu and Liantao both belong to this model and emerged around 2018.
As for how the platform makes profits in this process, Su Jie believes that it may be through charging real-name authentication fees, platform withdrawal fees, and advertising fees that can be monetized after the user group brings in traffic. In more extreme cases, the project party sets up a virtual currency exchange through the APP. This trading platform is not connected to any mainstream exchange on the market, and can issue coins for profit.
"This type of scam targets consumers who don't want to spend money to get a bargain, and this is also the core reason why these elderly people join the group," said Su Jie.
In fact, this kind of "zero-cost" gameplay of taking advantage of the DCEP "hotspot" is not uncommon. The Beijing News reporter noticed that the "Central Bank International Wallet" is similar to the previous "dcep.api" project.
The promoter of "dcep.api" claims that after clicking the link, you need to register with your mobile phone number, email address and official name. You don't need to bind a card or charge money. You can generate your own referral code to recommend merchants and get commissions. In addition, there is a limit of 10,000 places per day, and registration starts at 12 o'clock every night. However, not only does it not have information such as the background and contact information of the organizer, but the website continues to promote "working hard to build...", "DCEP payment interface will be opened soon", "Please continue to pay attention to us, there will be heavy news to be announced", "There are still 11 days before the announcement", etc.
However, the website is currently closed.
Fancy hunting
Investing in virtual currency is a scam
“Wallet” and “Mining” Ponzi schemes target the elderly
In February this year, Chengdu launched a digital RMB red envelope activity, which was the fourth city to conduct a public test of the digital RMB in five months, following Shenzhen, Suzhou, and Beijing. As more citizens try it out and the price of Bitcoin continues to hit record highs, blockchain is getting closer to the people, and related scams are becoming more and more rampant.
A reporter from the Beijing News found that Ponzi schemes under the names of "wallet", "mining" and "mutual aid" have appeared one after another, and middle-aged and elderly people, especially retired employees, are often the main targets.
In Su Jie's opinion, the target groups of these scams were mainly the "young generation" who were proficient in using various apps. The reason why they spread to the elderly was that "the elderly have more funds on hand."
Aunt Zhang recently retired and is keen on investment and financial management. In mid-February, a netizen named Xiao Chen told her that it only cost 5 cents to buy a certain virtual currency now, and it would rise to 200 yuan in the future. This person also pulled her into an investment and financial management social group (known as the "acquisition group"). People in the group kept "taking turns" to report the amount of virtual currency they bought, and the amount generally exceeded 10,000 yuan.
"The rate of return is so high, and seeing so many people investing in the group, it feels very real." After the contact person emphasized that the money must be transferred to the corporate account in order to register, Aunt Zhang transferred 5,000 yuan to the corporate account provided by Xiao Chen with the idea of giving it a try.
After the transfer, Aunt Zhang saw the virtual currency she purchased on the official website provided by the other party. However, although the price of the virtual currency has been fluctuating and generating income, she cannot withdraw it. After that, she contacted Xiao Chen and the investment group many times but received no response.
What Aunt Zhang encountered was a typical scam using virtual currency as a gimmick. Unlike projects under the banner of DCEP, this type of scam uses virtual currency investment and high returns as an inducement, mainly using apps and exchanges, which is more direct and more common among the elderly.
The reporter searched and found that there were projects that directly issued tokens in the name of DCEP, including ERC-20 tokens and tokens issued by the Rosex exchange. DCEP/USTD, which was launched on the Rosex exchange, was launched in October 2019, and the transaction volume reached 15,928,075.46 in one day, and the price of a single coin once exceeded 16 yuan. However, the Rosex official website has been closed. Some middle-aged and elderly investors told reporters that they invested about 50,000 yuan in the token, and with the closure of the official website, they lost all their money.
Su Jie analyzed that the tokens were not on the chain and could not be checked. They could use the stand-alone mode to create a false impression of token price increase in the internal market to attract users to buy tokens. Then, they took the opportunity to sell the tokens for cash, and the token price plummeted to zero. Such investors often "lose as much as they invest".
The reporter checked public cases and found that a Ms. Jin was pulled into an investment group by a so-called "Teacher Ye" who was good at investment and financial management. She invested in virtual currency through the mentor many times. Later, she found that she was removed from the investment group and blocked by the "mentor". The money invested in the platform could no longer be withdrawn. She was defrauded of a total of more than 880,000 yuan.
In addition, in March this year, the scam of the well-known Ponzi scheme Ubank was exposed, and the mining routine was once again pushed to the forefront. The reporter found in its promotion group that Ubank claimed to have incubated 238 real enterprises in two years, owned 4 exchanges, had a monthly net profit of up to 690 million, a monthly transaction volume of over 300 billion, and 280,000 active miners.
Similar to other Ponzi schemes, Ubedi initially attracted investors to invest in mining by fabricating investment projects that could generate high profits. At the same time, it used the means of "locking up for mining and doubling the income" to trick investors into locking up their invested funds, promising to invest 100,000 UBNK to buy a mining machine worth 17,000 USD, enjoy 3.5 times the income of the mining pool, and an additional 0.3% income per day.
This platform follows the "static + dynamic" pyramid scheme of recruiting people. Static income refers to the idea that investors first invest a portion of funds, and after a period of fermentation, they are released in proportion to earn high interest. According to the platform, the total monthly income is 23%. Dynamic income uses the two mechanisms of "sharing acceleration and community acceleration" to induce the development of downlines and obtain high returns. The two sections ultimately mean the same thing: recruiting people. The more people you recruit, the greater the reward will naturally be, and the greater the proportion of funds released will be.
MLM variants
Developing downlines and compound compensation have become routines
"Pass the Flower" is actually a pyramid scheme
"This type of virtual currency Ponzi scheme often involves initial users who, after tasting the sweetness, develop downlines in order to get more rebates, while latecomers will lose all their money. It's a game of passing the parcel," said Su Jie.
Wang Deyi, chief lawyer of Beijing Xunzhen Law Firm, told reporters that they usually have obvious characteristics, including imitating well-known virtual currencies such as Bitcoin, having a big background, and promoting business through developing downline and multiple compensation methods. In addition, the platforms or websites of such transactions have not obtained legal filing or permission, and often have customized APPs to match them. Some software can automatically climb over the wall and evade domestic network monitoring. During the transaction process, investors are induced to join the funds as much as possible.
In fact, issuing virtual currency is illegal in my country. On September 4, 2017, the People's Bank of China and seven other departments issued the "Notice on Preventing the Risks of Token Issuance and Financing", which clearly pointed out that token issuance and financing refers to the financing entity raising so-called "virtual currencies" such as Bitcoin and Ethereum from investors through the illegal sale and circulation of tokens. It is essentially an act of illegal public financing without approval, and is suspected of illegal sale of token tickets, illegal issuance of securities, illegal fundraising, financial fraud, pyramid schemes and other illegal and criminal activities.
The Beijing News reporter sorted out the virtual currency fraud cases disclosed by the police in various places and found that the current fraud process of "inviting people to join the group - platform investment - system lock-up - harvesting leeks" is extremely common. The common routine is that except for the victims, all members in the group are accomplices of the fraud suspect. At the same time, for investors with strong vigilance, the process is generally: the funds can be withdrawn for the first time, but from the second time onwards, no money can be withdrawn, and no messages will be replied thereafter.
Lawyer Wang Deyi said that promoting business by developing downlines and using a multiple-level compensation system is a form of online pyramid selling, which is expressly prohibited by Chinese law. Currently, some of these players are complete novices, while others are self-professional "professionals."
Wang Deyi stressed that those who participate in developing downlines are either a link in a pyramid scheme or a chain of fraud, and are the targets of legal crackdowns. This type of transaction is essentially an online fraud, the purpose of which is to defraud investors of their funds. Investors do not trade real content in the virtual online world, but play electronic games on a fake platform built by the dealer behind the scenes. From the perspective of Chinese law, it is recommended that investors do not participate in various online virtual currency transactions, nor make profits by developing downlines. Once funds are defrauded, it is very difficult to recover the stolen money.
The reporter sorted through the judgment documents and found that in January 2020, the Donghu District People's Court of Nanchang City, Jiangxi Province, disclosed a "virtual currency" online pyramid scheme case. The defendant Mo Mounian and others developed a software called "MeiChain" that sells virtual mining machines and virtual currencies, and designed related promotional materials, operation models, rebate models, etc. In addition, under the pretext that virtual mining machines can produce virtual currencies and virtual currencies can be traded, participants are required to obtain membership qualifications by purchasing virtual mining machines, and by repurchasing participants' virtual currencies and offering high returns as bait, participants are lured to continue to recruit others to participate and defraud property.
The Donghu District Court held that the project was organized into levels according to the order in which upline and downline members joined, obtained a certain percentage of virtual currency earnings from each level of the downline as the basis for rebates, and repurchased the participants' virtual currency to induce participants to continue to develop others to participate, defrauding property. The number of people developed was large, disrupting the social and economic order. Its actions constituted the crime of organizing and leading pyramid selling activities.
Similarly, PlusToken, which is known as the "largest Ponzi scheme in the cryptocurrency circle, with a case amount of more than 50 billion yuan, was also treated as a pyramid scheme. In September 2020, the first-instance result of the Procuratorate of Yancheng Economic Development Zone, Jiangsu Province showed that the court sentenced 16 defendants including Chen, Ding, and Peng to fixed-term imprisonment ranging from two to eleven years for organizing and leading pyramid schemes.
Beijing News Shell Financial Reporter Zhang Shuxin Editor Wang Jinyu Proofreader Li Ming
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