Revealing the "Hell Coin" scam: It is purely a pyramid scheme and its essence is gambling

According to China Radio International's "News Panorama", investment always involves risks, and as a newly emerging virtual currency, investment risks are certainly not few. Yesterday, "News Panorama" focused on a virtual currency scam called "Hell Coin". According to incomplete statistics, hundreds of investors across the country invested in the Hell Coin China website, a financial management platform. In just a few months, the investment platform was closed and could not be opened. The behind-the-scenes operator was suspected to have run away, and the investors' more than 7 million yuan of funds were almost all wasted.

"Hulcoin" is a virtual digital currency promoted by the British municipality of Hull in 2014, but it has not officially entered China. The so-called "Hulcoin" invested by these deceived investors is actually an online pyramid scheme disguised as an Internet scam. So, what is the true face of Hullcoin and other virtual currencies on the market?

At a meeting point in Changsha, Hunan, the reporter met Mr. Zhang, a Heercoin investor who is less than 40 years old. He showed the reporter the transfer records in the Heercoin order center, etc., proving that he is a "director-level" figure in the Heercoin pyramid. Slightly different from other investors, Mr. Zhang has been aware of the operation of the Heercoin scam since it first appeared.

Mr. Zhang has his own team and is an "investor" who specializes in investing in various virtual currencies on the market. During the conversation, his three mobile phones kept sending messages. He admitted that the Hull Coin promoted in China is actually the so-called "MLM Coin" and the real British Hull Coin has never officially entered China. In addition, the Hull Coin purchased by Chinese investors is fundamentally different from traditional virtual currencies (such as Bitcoin). Because they do not have characteristics such as open source, many different types of "XX coins" on the domestic market are mostly just a cover.

Mr. Zhang told reporters that those without open source codes are purely pyramid scheme coins that attract people to join with bonus models, and the "coin" is just a cover.

In a statistical data obtained by the reporter, investors are divided into five levels: entry-level, regional agent, municipal agent, provincial agent and director level. The investment threshold for the entry-level is 1,000 yuan, and the director level is as high as 50,000 yuan. Moreover, each new investor is marked with a recommender. Mr. Zhang explained that this type of virtual currency is generally divided into static income and dynamic income. The so-called static income is the income brought by the continuous appreciation of the virtual currency itself, and the dynamic income, to put it bluntly, is the income brought by the continuous promotion and development of downlines and the continuous "pulling people into the game".

Mr. Zhang said that the Hull coin was issued at a price of 0.1 pounds at the time, and it had already risen a lot in the market when the website was shut down. Static income is that you sell the coins when they appreciate in value, and 50% of the coins can be sold as long as someone takes over. Dynamic income is promotion. Share the project on WeChat circle, and if someone is interested, they can register. It is a promotion registration system. As long as they register, they belong to my downline. For example, if he joins with 1,000 yuan, I can get 10%, which is 100 yuan.

Mr. Zhang is at the highest level in this model - director level. He told reporters that the dynamic income of Helcoin, in addition to the 10% commission for "inviting people to join the game", there is also a 1% to 3% "order reward" based on each "order" of investors, that is, the size of each investment amount. Specifically, 10,000 yuan can be commissioned 1%, 30,000 yuan can be commissioned 2%, and 50,000 yuan can be commissioned 3%.

Mr. Zhang said: "You can take the 10% direct referral bonus as usual, and also the 3% order bonus from the order center. Fifteen thousand is a city-level agent, with only a 1% order bonus, thirty thousand gets 2%, fifty thousand gets 3%, plus a 10% direct referral bonus."

Screenshots of the website before the investment platform was shut down show that when investors first join the Hurcoin platform, they need internal members to help them activate their accounts, and account activation requires investors to buy "activation coins." This is also a way for the Hurcoin platform to continuously gather funds by attracting people.

Mr. Zhang said: "If I have these 100 activation coins, you give me the money and I will help you activate your account, and the activation coins will be used up. But if I don't have dynamic income and don't have these activation coins, and I need to do promotion, you give me the money and I will transfer your money to my superiors, and my superiors will transfer the activation coins to me."

In addition, there are also "management recommendation awards" and other items that are used to make profits by developing downlines. In this way, the money of investors at different levels is collected level by level, and finally flows into the real behind-the-scenes operators at the top through bank transfers or online payment methods such as Alipay.

Unlike Bitcoin, which is open source and has a limited total amount, many virtual currency investment platforms, including Hellcoin, issue various virtual currencies, and the amount and speed of their issuance are all controlled by humans. Moreover, their source code is not open and can be issued indefinitely. It can be said that they are completely in a "black box mode" and do not have a consensus mechanism. Therefore, they are not virtual currencies in the traditional sense.

Nowadays, there are numerous virtual currencies on the Internet that claim to have financial management functions. Many of them are new online pyramid schemes carried out by criminals under the banner of virtual currencies.

The State Administration for Industry and Commerce issued a risk warning in March, reminding the public to be careful of new pyramid schemes under the banner of various new network concepts and new marketing methods. Some provincial and municipal public security departments have also previously issued safety warnings that "K" coins and Baichuan coins are suspected of illegal pyramid schemes.

Whether it is "virtual currency pyramid scheme" or "financial pyramid scheme", what are the differences between this new type of online pyramid scheme and traditional illegal pyramid scheme? How should investors judge? Why do many investors still flock to this type of virtual currency even though they know it is suspected of illegal pyramid scheme?

Li Xu, a well-known anti-MLM expert, introduced that the virtual currencies on the market, including OneCoin, TreasureCoin, BaichuanCoin, etc., are essentially the same as HullCoin, and are all suspected of being MLMs.

In the past, traditional illegal pyramid schemes often involved illegal detention, violent coercion, forced brainwashing and other behaviors. However, during the investigation, the reporter found that online pyramid schemes under the guise of various "virtual currencies" are different from traditional illegal pyramid schemes. They have more characteristics such as low thresholds, hidden transactions, wide scope, and strong speculation. Once the investment platform is closed and the "operator" behind the scenes runs away, it is also not easy for investors to recover their losses. Because in the process of online transactions, electronic evidence recording chats, transactions, etc. is easy to disappear, destroy, and tamper with, and the suspects commit crimes across regions, which brings considerable difficulties to the formation of the chain of evidence and the detection of cases.

Li Xu said that before investing, people can avoid pyramid schemes by judging from three aspects. First, the characteristics of pyramid schemes, inviting you to pay an entry fee and let you buy virtual currency. Second, requiring you to develop downlines and form a certain hierarchical relationship. Third, through rebates at all levels, there will be direct and indirect rebates after developing downlines.

However, some so-called investors who participated in Internet pyramid schemes that the reporter contacted still participated in this "Ponzi scheme" of passing the parcel even though they knew it was a gamble. Mr. Zhang knew the operating model of the Hull Coin scam very well, but he still spent 50,000 yuan to become a director, just to "occupy the high point" in the pyramid of pyramid schemes in advance and make a profit. However, he still failed to escape the trap designed in advance by the "operator". However, Mr. Zhang said that more than 80 people, including his team, were actually doing financial management games of multiple virtual currencies at the same time. If Hull Coin ran away, they could still earn it back from other "coins".

Mr. Zhang said: "It's not because the Hurcoin collapsed and they suffered losses that they are afraid and don't want to play anymore. They just want to make back their money as soon as possible by trading other coins. So the traders take advantage of people's greed and promise a high return. Everyone is gambling, the essence is gambling, and it has reached a very crazy level."

Experts have analyzed that there are many reasons why such pyramid schemes continue to emerge despite repeated bans. In order to crack down on various "pyramid scheme coins", in addition to timely filling in laws and regulations, financial supervision, and expanding and improving investment and financial management channels, investors must also enhance their legal awareness, adjust their investment mentality, and invest rationally. (Wang Yiqun)