Police in China have recently taken down what’s being called the country’s largest pyramid scheme, which reportedly used a fake cryptocurrency to lure in investors and amass a whopping 15 billion yuan (about $2.3 billion).
According to local media outlets, the alleged cryptocurrency pyramid scheme was OneCoin. Founded by a Bulgarian woman, Ruja Ignatova, the organization is well-known in the cryptocurrency community, which mostly sees it as a pyramid scheme that lures in investors.
The organization is said to have entered China in September 2014, and was ruled an illegal pyramid scheme in the country in December of last year. According to the Zhou Intermediate People’s Court in Hunan, OneCoin charged membership fees that ranged between 1,000 yuan ($156) and 280,000 ($43,900) yuan.
2/ In December of last year, the Zhuzhou Intermediate People’s Court in Hunan China ruled that #OneCoin was an illegal pyramid scheme — a multilevel marketing business that raises profits *primarily* by recruiting new investors (distributors).— DirectSelling Report (@Direct_Selling) May 15, 2018
Per local reports, the organization lured in 1.42 million investors in China, which were spread across 79 different levels within the organization. These investors created over 2 million accounts, with OneCoin having a total of 10.77 million accounts worldwide.
Police dismantled the scheme in the country using 14 special investigation teams. Their investigation started back in March 2016, after authorities in the central province of Hunan received complaints that claimed some were promoting illegal pyramid schemes.
The Paper’s report reads (roughly translated):
“Zhuzhou police arrested a total of 119 criminal suspects. At present, two people have been sentenced by the Zhuzhou County People's Court to fixed-term imprisonment for more than five years. Female police officer Hu Jie used her advantage in this area to find a breakthrough and found key evidence for a successful case.”
The alleged pyramid scheme attracted the public’s attention in the country after news reports claimed a former convict who had been wrongfully imprisoned for 23 years invested 1 million yuan ($156,700) in the scheme. At the time he received 2.75 million from the state in compensation.
Per some reports, a video showed a OneCoin salesperson claim the cryptocurrency was licensed in 214 countries – more than China itself acknowledges.
OneCoin Is Still Alive
Notably various countries throughout the world have crackdown on OneCoin, with India, for example, arresting the organization’s promoters and banning its alleged cryptocurrency. Earlier this year, authorities in Bulgaria raided OneCoin’s offices and shut down its servers.
Despite the hit, OneCoin remains operational in various countries throughout the world, including China, where it’s still present on social media platform likes Youku and Weibo.
This wasn’t the first time Chinese police hit a cryptocurrency-related pyramid scheme. As covered, authorities in the country arrested 9 individuals in an alleged $13 million pyramid scheme that sold members a cryptocurrency called DBTC, while promising them daily returns.