Be Wary Of Illegal Pyramid Schemes Risks Of Blockchain Digital Currency

Be wary of illegal pyramid schemes risks of blockchain digital currency

In 2013, the People's Bank of China, the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission issued the "Notice on Preventing Bitcoin Risks" (hereinafter referred to as the "Notice"), which meant that the country began to truly examine blockchain digital Financial risks posed by currencies.

Despite the financial risks warned by the Notice, some operators use illegal pyramid schemes to defraud participants of their property in the name of operating blockchain digital currency businesses. The author team introduces the typical model of illegal pyramid schemes using blockchain digital currency through real cases, and reminds potential participants of the risk of property loss.

typical

From August 2014 to March 2015, the defendant Li founded a technology company in Hong Kong, China, created false virtual currencies "dark coins" for investment, and used the reputation and value of real dark coins for publicity, in this way attracting and Continuously develop members, create a "dark currency" trading website, be responsible for and manage the Shenzhen office location, and control all funds used by the company to operate the "dark currency" trading website.

A technology company and its online platform have no physical business activities. They offer huge kickbacks as bait. Leaders and members in various regions across the country continue to develop and invest in virtual currency "dark coins" offline through publicity, classes, introductions, etc. "In the name of "dark currency", participants need to pay different levels of "dark currency" mining machine rental fees, that is, threshold fees, in order to obtain membership. Each member's downline is divided into three lines (i.e., three areas) according to The order is fixed, and the number of developers is used as the basis for rebates, luring participants to continue to develop other people's participation, defrauding property, and making direct profits by selling virtual currency "dark coins". The MLM organization is divided into three levels according to different purchase accounts: V1, V3 and V9 require 1,000, 3,000, and 9,000 dark coins respectively. The fee is multiplied by the real-time price of dark coins and the number of dark coins (corresponding to an account amount of about 15,000, 45,000 yuan). The remuneration method of this MLM organization is divided into static income and dynamic income. Income, static income, the so-called mining income, is determined by the website system according to the member account level every two hours. The company website system adds the number of dark coins statically allocated to members of the three districts as the overall performance of the district. According to the total number of points For large districts, central districts, and communities, dynamic allocation is performed every two hours. There is no reward for regional performance. Among members with different account levels, the dynamic income of districts and communities will be distributed in different proportions. In addition, the dynamic income of each account Rewards also follow ladder distribution rules. The company holds press conferences and various activities, vigorously promotes them on the Internet, and uses the Internet as a platform to develop members in mainland China. As of March 19, 2015, the "Dark Coin" MLM organization has a total of registered members across the country There are 34,365 accounts, and the amount involved is nearly 1.5 billion yuan.

The court held that a company’s “dark currency” itself had no value or use value, did not have commodity attributes, and was not an online virtual currency. Although the so-called "dark currency" can be realized by registering new members, transferring money between members, and between members and companies, the "dark currency" as a carrier is only a transfer mark symbol and a tool for calculating the rebate amount, without any sales. Characteristics and attributes of the product. Members of a certain company have no other source of rebates except the membership fees paid by registered members. If you want to continue to get rebates, you must continue to recruit other people to sign up as new members. The so-called static income of members comes from the membership fees paid by the members themselves and the membership fees paid by downline members. Dynamic income comes from membership fees paid by downline members. The essence of the company's operation is that in the name of investing in the so-called virtual currency "dark currency", participants are required to pay fees to obtain membership, form fixed levels in a certain order, and use the number of developers as the basis for remuneration and rebates. It is obviously a pyramid scheme, but it only uses the form of "virtual currency" to pay the above rewards and rebates in installments, which is more deceptive and covert.

The author's team believes that the defendant's behavior constitutes the crime of organizing and leading pyramid schemes. Article 224-1 of my country's Criminal Law stipulates that in the name of promoting goods, providing services and other business activities, organizations and their leaders require participants to obtain membership by paying fees or purchasing goods or services, and must follow certain membership requirements. established. Order. Directly or indirectly using the number of developers as the basis for remuneration or kickbacks, luring and coercing participants to continue developing other personnel to participate, defrauding property, disrupting economic and social order, and constituting organized crime-led pyramid schemes.

The author's team believes that the essence of MLM behavior is a kind of contract fraud. Because Article 224 of our country’s Criminal Law stipulates the crime of contract fraud, and Article 224-1 stipulates the crime of organizing and leading pyramid schemes. Therefore, although the sentencing for the two crimes is different, Article 224-1 stipulates the crime of organizing and leading pyramid schemes. The crime of guiding pyramid schemes belongs to the derivative category of the crime of contract fraud in legislation. Therefore, the leadership of a pyramid scheme organization should be determined based on the legislative purpose of this crime and whether the perpetrator fabricated facts, concealed the truth, and defrauded the victim of property for the purpose of illegal possession. In this case, the defendant's behavior can obviously be regulated by the above-mentioned legislative purposes, so it can be determined that it constitutes the crime of organizing and leading pyramid schemes.

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