China is quickly becoming a hub for interesting news regarding blockchain technology. In fact, recent reports indicate that authorities in the Chinese province of Shangdong have arrested a group of 10 people in relation to a $46.8 million pyramid scheme, disguised as a blockchain project.

Blockchain-Based E-Commerce Platform Lures Investors

The suspects in question are believed to have founded an e-commerce platform back in 2017. In an effort to raise money, they provided investors with access to lucrative membership programs in exchange for initial capital. The scammers then proceeded to inform investors that their membership fees would guarantee them varying amount of shares and dividends.

According to reports from local news agencies, the scammers created five hierarchical tiers and even went as far as listing specific details of their project— such as country and regional specific agents. To further attract investors, the founders stated that the platform was based on blockchain technology and big data. Additionally, words such as ‘poverty alleviation’ and ‘western development’ were added to the scheme as well.

Estimates indicate that the $48.2 million investment came from over 3,000 individuals.

Efforts to Crackdown on Such Ventures Gather Momentum

In a recent report, the Chinese cybercrime division mentioned that it has identified a total of 400 fraudulent, crypto-related schemes.

As part of their nation-wide crackdown on crypto con-artists, the division has also arrested the founders of another digital currency pyramid scheme, which reportedly raised $13 million from 13,000 investors. Not only this, but Chinese authorities also charged 4 other suspects, who are suspected of being involved in the $2 billion OneCoin scam.

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