CoinVoice has recently learned that the Supreme People's Court and the State Administration for Market Regulation jointly released 5 typical cases of punishing online pyramid schemes in accordance with the law, including a case of promising high returns under the guise of investing in "virtual currency". The basic facts of the case are as follows:
In early 2018, the defendant Chen and others used blockchain as a gimmick and planned to set up a "certain Token" network platform to carry out pyramid selling activities, requiring participants to obtain a membership account of the platform through recommendations from their online friends and pay a threshold fee of virtual currency worth more than US$500 to obtain value-added services. They could use the platform's "smart dog moving bricks" technology to conduct arbitrage transactions in different trading venues and obtain platform profits.
In order to evade the crackdown, Chen and others moved the platform's customer service team and coin transfer team abroad in January 2019, and continued to conduct pyramid selling activities on the "some Token" network platform. According to statistics, the "some Token" network platform has more than 2.6 million registered member accounts, with 3,293 levels, and has collected more than 9 million virtual currencies such as Bitcoin, Tether, and EOS from members. The People's Court of the Economic and Technological Development Zone of Yancheng, Jiangsu Province sentenced Chen to 11 years in prison and a fine of RMB 6 million for organizing and leading pyramid selling activities; the remaining defendants were sentenced to prison terms ranging from eight years and eight months to two years, and fined; the illegal gains were recovered, confiscated, and turned over to the state treasury. After the first instance verdict, Chen and others appealed. The Intermediate People's Court of Yancheng, Jiangsu Province ruled to dismiss the appeal and uphold the original verdict.
The People's Court imposed corresponding penalties based on the position and role of the organizers and leaders of cross-border network pyramid schemes in the entire criminal chain. At the same time, the Bitcoin and other virtual currencies involved in the case were confiscated in accordance with the law, cutting off the defendant's financial ability to commit cross-border crimes again, demonstrating the judicial organs' firm attitude of defending the security of Internet finance and maintaining the stable and healthy development of the financial market order. [Original link]
