Senior officials actively intervened in digital currency cases many times. The Ministry of Public Security disclosed the full text of the PlusToken case

According to the "Risk Warning on Preventing Illegal Fund Raising in the Name of "Virtual Currency" and "Blockchain"" issued by the China Banking and Insurance Regulatory Commission and other five departments, please establish a correct investment concept. The content of this article does not endorse the promotion of any business or investment activities . Investors are requested to raise their awareness of risk prevention.

Introduction:

On the 30th, the Ministry of Public Security disclosed the full picture of the Plus Token case, and most media only quoted the first paragraph. Wu Blockchain quoted it as follows for readers' reference. The article characterized it as the first online pyramid scheme case using Bitcoin and other digital currencies as the transaction medium.

Wu said blockchain learned that the number of digital currency cases supervised by high-level officials has increased since last year, which may be related to the successful cracking of Plus Token. For example, a case in Hangzhou and the card freezing trend in Dongguan were both directly supervised by the Ministry of Public Security. This shows that strong regulatory authorities have begun to intervene more closely in digital currencies.

However, since relevant products in China are not compliant and the laws and regulations are very vague, if the regulatory authorities are not pushed to establish corresponding rules and regulations, the boundaries of law enforcement may become blurred.

Lawyer Xia Wei said that the public security system mainly targets those who use digital currency as a pretext to engage in pyramid schemes. The Plus Token case shows the strength of the Yancheng police and the high efficiency of the Ministry of Public Security, which completed the global crackdown from March 2019 to 2020.

But it also shows from another perspective that overseas entities are no longer safe, as some other recent judgments also illustrate. Regulators are paying more and more attention to digital currency-related cases and are taking the initiative to intervene.

Reference: Why did the Yancheng police crack down on the "coin/currency circle" after arresting PlusToken and then Gigabit Miner? (In-depth)

full text:

Recently, in accordance with the unified command and deployment of the Ministry of Public Security, the public security organs filed a case to investigate the "Plus Token platform" online pyramid scheme case, and successively arrested all 27 major criminal suspects who had fled abroad and 82 core members of the case, completely destroying this large-scale transnational online pyramid scheme organization entrenched in China and abroad. This case is the first online pyramid scheme case cracked by the public security organs that uses Bitcoin and other digital currencies as the trading medium, involving more than 2 million participants, more than 3,000 levels of hierarchical relationships, and the total value of digital currencies involved in the case exceeds 40 billion yuan.

At the beginning of 2019, after the public security organs in Yancheng, Jiangsu Province found clues that Chen and others were suspected of using virtual currency trading platforms to organize and lead pyramid schemes, they immediately set up a special task force to crack the case and reported the case to the Ministry of Public Security. Under the organization and guidance of the Economic Investigation Bureau of the Ministry of Public Security, the task force gave full play to the achievements of the economic investigation information construction, conducted in-depth research and analysis of the case, and preliminarily found out the organizational structure, personnel level and capital flow of the pyramid scheme gang. In June of the same year, under the coordination and organization of the Ministry of Public Security, the police of the task force went to Vanuatu, Cambodia, Vietnam, Malaysia and other countries and regions to strengthen police law enforcement cooperation and actively cooperate with local police to successfully capture 27 major criminal suspects hiding abroad. In March 2020, the Ministry of Public Security deployed public security organs across the country to launch a cluster campaign and arrested all 82 key members suspected of pyramid schemes.

After investigation, it was found that in May 2018, the criminal suspect Chen and others started to engage in Internet pyramid selling crimes by setting up the "Plus Token platform" and developing related applications. The platform uses blockchain technology as a gimmick and digital currencies such as Bitcoin as a trading medium. Under the guise of providing digital currency value-added services, it promises high rebates to attract the participation of the general public. The platform has a technical group, a marketing group, a customer service group, and a coin allocation group, which are responsible for technical operation and maintenance, publicity and promotion, consultation and reply, and review and withdrawal of coins. Participants can obtain membership by recommending online and paying digital currencies worth more than US$500 as a "threshold fee". Members will obtain the "Plus" coins created by the platform according to the value of the digital currency paid, and form a hierarchical relationship between upper and lower lines according to the order of joining. According to the number of downlines developed and the amount of funds invested, the platform divides members into five levels: members, big households, big coffees, big gods, and creators, and distributes corresponding amounts of "Plus" coins as rewards and rebates according to the level.

In order to attract more people to participate, the criminal gang used the Internet to publicize the platform's joining methods, operating models, bonus systems, profit prospects, etc., hired foreign personnel to impersonate the founders of the platform to package and forge the so-called "international platform" and "foreign project" background, and promoted the platform through irregular meetings, concerts, travel and other offline activities, and even spent a lot of money to hold promotion conferences with thousands of people abroad. According to statistics, during the existence of the platform, more than 2 million members were developed, with more than 3,000 hierarchical relationships, and millions of digital currencies such as Bitcoin and Ethereum were collected from members. The amount involved in the case reached more than 40 billion yuan (calculated based on the market conditions at the time of the incident), most of which were used to issue members "recruiting people" rewards, and some were converted into cash for daily expenses and personal squandering by Chen and others.

Relevant officials of the Ministry of Public Security said that in recent years, the means of pyramid schemes have been constantly updated, and their concealment and deceptiveness have been continuously enhanced. The public security organs will actively adapt to the new characteristics and changes of such crimes, further innovate ideas and improve capabilities, and always maintain a high-pressure situation of cracking down on pyramid schemes and illegal and criminal activities. Together with relevant departments, they will continue to carry out source control and comprehensive governance, effectively maintain the normal economic management order of the country, and protect the legitimate rights and interests of the people. At the same time, the public security organs remind the general public that participating in pyramid schemes will not only cause property losses, but may also be suspected of illegal crimes, and they should not believe in the "investment" traps of high returns and high returns.