Shanghai police bust 'virtual currency' Ponzi racket
The Ponzi scheme suspects were caught from Hainan, Shaanxi and Sichuan provinces as well as from Shanghai and Beijing.
More than 10 suspects have been detained for allegedly running a Ponzi scheme in which tens of thousands of people were drawn to invest in a worthless "virtual currency," Shanghai police said on Tuesday.
This was the first Ponzi scheme of this type to be reported in Shanghai.
Police said they started their investigation recently after they discovered a suspicious website which recruited virtual currency investors and promised generous rewards for new investors.
The website started its operation in June 2020, with its server located outside the Chinese mainland, police said.
The main suspect, a man surnamed Mou, established a blockchain technology company and hired a full-fledged team to run the scheme, with investors recruited both online and offline, according to police.
Investors opened an account on the website and paid to have special "token money" in their account. Their investment was rigged by the suspects so that they would keep losing money as the "token money" depreciated if they didn't try to cover their loss by drawing other investors, police said.
For luring newcomers, the investors got a reward of 10 to 100 percent on their own investment. By the time the case was cracked, the website had more than 60,000 accounts with over 100 million yuan (US$16 million) invested, according to police.
The pyramid scheme, police said, had a total of 72 layers.
The suspects were caught from Hainan, Shaanxi and Sichuan provinces as well as from Shanghai and Beijing.
