Chinese Police Arrests Masterminds, Seizes $8.46M in Crypto Connected to Online Pyramid Scheme

Chinese police officers, specifically those operating from the Pingchuan Branch of the Public Security Bureau of Baiyin City, Gansu Province have cracked a case involving a pyramid scheme that was built around the XRP digital currency.

As reported by the Xinhua news agency, the case features as many as 7 suspects, and investigation into the fraudulent scheme began as far back as March 2021.

Unlike the famous pyramid schemes that operate through a known website, the “Ripple UnionPay Community,” as it was called, was designed and operated through a customized mobile application. As the investigations revealed, the application was created by a software company that is based out of town. 

The masterminds of the scheme were identified as Wang and Zhang, and the promise of the pyramid scheme was that the Ripple UnionPay Community app was capable of utilizing “node dividends, community promotion awards, community operation awards, performance awards, etc. to obtain high returns.” 

In order to participate in this scheme so as to benefit from the rewards promised, interested investors will have to download the mobile app and subscribe using Ripple Coins. Thanks to the targeted raid, the police have recovered some hardware items and have been able to confiscate a total of $8.46 million in Ripple Coins. The organization is poised to be dismantled after garnering as many as 47,000 members spread across about 30 provinces.

The pyramid scheme is just a variant of prominent crimes that are being perpetrated using digital currencies. The supposed invincibility of digital currencies is one of the reasons why fraudsters have chosen to always commit their crimes through these nascent asset classes. However, trends thus far have shown that this belief is erroneous, as most crimes featuring digital currencies have a track record of being busted by authorities. 

One of the successful products of targeted investigations into cybercrimes is the arrest of Ransomware masterminds in Ukraine as reported by Blockchain.News back in 2021.

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