Beijing Haidian investigates virtual-currency-assisted pyramid scheme case; technology company fined and confiscated 930000 yuan
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AT A GLANCE
Beijing investigates first case involving the use of blockchain and virtual currency technologies to assist a pyramid scheme; technology company involved fined and confiscated 930000 yuan.
Article
【Beijing handles first pyramid scheme case involving virtual currency; company involved fined and confiscated 930000 yuan】
The Beijing Haidian District Administration for Market Regulation recently investigated and handled the city’s first illegal case involving the use of blockchain and virtual currency technologies to assist pyramid scheme activities. A technology company was fined and had a total of 930000 yuan confiscated. The company involved provided outsourced services, including technical operations and maintenance, marketing promotion, and exchange integration and maintenance, for a certain public blockchain. The public blockchain had previously launched the Atomic Plan and Hathaway Plan, requiring participants to invest funds to obtain eligibility to join and offering rebates based on the number of people recruited. Regulators determined that, despite being expected to know that the relevant projects were suspected of constituting pyramid schemes, the company involved continued to provide technical and operational support, facilitating the flow of funds and the spread of the pyramid scheme activities.
Key points
01
The Market Regulation Bureau of Beijing’s Haidian District recently investigated the city’s first illegal case involving the use of blockchain and virtual currency technologies to assist pyramid scheme activities.
02
A technology company was fined and had a total of 930000 yuan or more confiscated.
03
The company involved provided outsourced services to a public blockchain, including technical operations and maintenance, marketing, exchange integration, and maintenance.
04
The public blockchain had previously launched the Atomic Plan and Hathaway Plan, requiring participants to invest funds to obtain eligibility to join and providing rebates based on the number of people recruited.
05
Regulators determined that, despite being expected to know that the relevant projects were suspected of being pyramid schemes, the company continued to provide technical and operational support.
AI-assisted interpretation
The following is analysis, separate from reported facts. Verify important claims independently.
In this case, a technology company provided technical and operational services for a public blockchain project. Regulators determined that the project allegedly constituted a pyramid scheme by offering rebates in exchange for financial contributions and recruiting participants; because the company continued to provide support, it was subject to confiscation and penalties.
Why it matters to readers
The case shows that providing technical operations and maintenance, promotion, and trading-channel maintenance services for projects suspected of being pyramid schemes may also result in regulatory liability.
Be wary of projects that require an upfront financial contribution and then offer rebates for recruiting participants. Also note that related technical services do not mean that a project is lawful.
Risks and unknowns
The source text does not provide the name of the technology company involved.
The source text does not provide the name of the public blockchain involved.
The original text does not provide the penalty decision or specific basis for the penalty.
The original text does not state whether there was any subsequent recovery of funds or criminal investigation in the case.
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Related concepts
Blockchain
This term is not in the glossary yet. Browse related concepts in the glossary.
A scam in which participants primarily profit by recruiting newcomers, with fees flowing upward through multiple levels and the scheme ultimately becoming unsustainable.
