Shandong police cracked down on a pyramid scheme worth 200 million yuan. 8 tricks to recognize pyramid schemes

Recently, with the cooperation and assistance of public security organs in various places, the Economic Investigation Brigade of Anqiu Public Security Bureau in Weifang successfully cracked down on an Internet pyramid scheme criminal gang and arrested 14 core members of the gang from Guangdong, Beijing, Guangxi and other places. The total value of the case involved was more than 200 million yuan.

In May 2018, the Economic Investigation Brigade of Anqiu Public Security Bureau received a report from a local resident named Wu Moumou, saying that he was defrauded of 7,000 yuan when investing in an online platform. After the police filed a case for investigation, they found that the platform involved in the case, which the victim invested in, was under the guise of innovation, promising high returns, operating by attracting members and paying membership fees, and there was no physical transaction. The registered members involved more than 20 provinces across the country, with a large number of people and obvious membership levels, and were suspected of online pyramid schemes. After the case was reported, the Ministry of Public Security launched a cluster campaign in the national public security economic investigation system, and Anqiu Economic Investigation took the lead in solving the case.

The police officers in charge of the case focused on the characteristics of online pyramid scheme crimes, combined various means, and carried out difficult research and investigation, unraveling the massive amount of information and ultimately grasped the structural framework of this pyramid scheme organization and the identities of its top executives.

In the second half of 2018, Anqiu police went to Guangdong, Beijing, Guangxi and other places to carry out arrest operations, traveling tens of thousands of miles, and successively arrested 14 main criminal suspects including Jin Moumou and Zhang Mou. At the same time, a concentrated crackdown was launched across the country, and a large number of peripheral suspects involved in the case were arrested one after another.

After investigation, it was found that since 2017, the criminal suspect Jin and others have used a Shenzhen asset management company as a cover, borrowed the name of "asset securitization", "digitalization and virtualization of currency", and relied on the "XX Mall" network platform to develop members through members purchasing virtual currency series packages, etc., without physical transactions and physical support. The level and income of members are determined by the amount of payment and the number of people developed. Since the establishment of the gang, more than 20,000 members have been developed, and the total value of the case is more than 200 million yuan, which has caused great harm to society.

At present, six of the 14 core gang members have been approved for arrest and the case is under further trial.

▸What is MLM Coin◂

Everyone in life is afraid of "MLM". When MLM is covered with the high-tech cloak of virtual currency and transformed into MLM currency, the speed of its spread will be even more terrifying.

In fact, most people may not know the technology behind virtual currency, but are attracted by the effect of virtual currency to make them rich overnight.

So what is MLM coin?

The so-called MLM coins are a combination of "new concepts" such as Bitcoin and blockchain and the "traditional craftsmanship" of MLM activities. They disguise an empty concept as a technical product with promising prospects and rich application scenarios, and deceive investors into paying with the gimmick of high returns.

▸ What are the tricks of pyramid scheme coins◂

Every behavior in society has its own traces, and MLM coins are no exception. Even though they are covered with new technology, MLM coins are still similar to traditional MLM methods. If we try to dissect the scammers' routines, we will find some clues.

1. High-pitched slogans

Therefore, most MLM coins will have a slogan that is ambitious, inspiring and can hit people’s G-spots at once, such as “building a community of equal wealth together”, “protecting the copyright of cultural works”, “building a beautiful community autonomy together” and so on.

2. Registering a Shell Company Abroad

The project leader registers a shell company or exchange in China or abroad, and uses the name of blockchain technology to create coins (i.e., issue platform coins). The coin does not contain any blockchain technology content and has no circulation value.

3. Exaggerating earnings to attract investors

They claim 100% returns, and often use provocative words such as "only rises, never falls", "guaranteed profits", "making money while lying down", "winning the club's young model", and "realizing financial freedom" to promote their products. Once the purpose of defrauding money is achieved, they immediately reap the profits, using methods such as cliff-like transactions, exchanges pulling out the network cable and causing liquidation, and finally presenting abnormal trading curves such as epic Mario and the Eiffel Tower.

4. Packaging routines are both correct

They bought a ghostwriting white paper service on Taobao (now off the shelves) and established a fancy official website, which must be in English and in multiple languages. They put product-related information in WeChat communities, with multiple communities, and one person played several roles, singing and bragging to confuse users, in order to cast a net to catch fish and brainwash them.

5. Transaction data is not transparent

As we all know, one of the main features of blockchain technology is decentralization. However, the code of MLM coins is not open source, and they mostly use centralized accounting methods, making transaction data impossible to query and opaque.

6. Build your own platform for trading

It is not released through Ethereum smart contracts, nor is it listed on a formal digital currency trading platform. Instead, it is traded through a self-built platform. Self-built websites are the most common form, and there are also transactions through WeChat platforms, mobile APPs, etc.

7. All industries issue coins

Some MLM coins claim that the reason for issuing coins is the need to build world-class projects, or to build charity platforms and charity funds. MLM coins usually also use the names of malls, environmental protection, public welfare, games and other industries to deceive people.

8. Cash out and pay

There will often be a series of obstacles when withdrawing cash. The most common one is that you need to continue to "recruit people" before you can withdraw cash. There are also usually rules that prohibit withdrawals within a certain period of time, high handling fees will be deducted for withdrawals, and withdrawals cannot exceed a certain proportion of the total amount.

▸ How to identify pyramid scheme coins◂

1. Do you need to pay membership fees? Most MLM coins require membership fees, and the fees are divided into different levels, enjoying different profit models.

2. Whether it is necessary to recruit "people": Obtain corresponding share by recruiting "people": This is a feature of all MLM coins.

3. Is it difficult to withdraw money: Generally, pyramid scheme coins will not let you withdraw money easily, and they will set up a series of obstacles. For example, you cannot withdraw money for several months or half a year; you need to deduct high handling fees for withdrawal, and the withdrawal cannot exceed a certain percentage of the total amount, and you need to continue to "recruit people" before you can withdraw money.

Shandong Public Security Warm Tips: With the rapid development of Internet finance, Bitcoin and blockchain have attracted attention in the investment community, while criminals have also taken advantage of the situation, giving rise to a large number of pyramid schemes and fraud crimes disguised as "virtual currencies". A large number of investors bought "pyramid scheme coins" such as Markcoin, Onecoin, and Baichuancoin with the "dream of getting rich quickly", and eventually lost everything. Everyone must keep their eyes open and stay away from online pyramid schemes!

Original title of this article: "200 million yuan! When pyramid schemes are disguised as virtual currency, Shandong police crack down on a large-scale online pyramid scheme gang"

Source: Weifang Public Security Bureau