Cryptocurrency Pyramid Schemes Targeted By China’s Ministry of Public Securitybr>
China’s Ministry of Public Security has announced plans to crack down on online pyramid schemes, including speculation masked as cryptocurrencies and online games.
A pyramid scheme, or multi-level marketing (MLM), is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products or services. Some of the more well-known cryptocurrency pyramid schemes include OneCoin and Mining Max.
Between 2005 and 2015, China broke up more than 21,000 pyramid schemes. A study by the China University of Political Science and Law’s Capital Financial Institute found that Internet pyramid schemes had lured tens of millions of members. As a result, Chinese regulators have moved to rein-in financial risks associated with cryptocurrency trades and pyramid schemes.
In a statement, the ministry said it will act jointly with the industrial and commercial department to stamp out pyramid-type schemes, besides punishing those who swindle students and vulnerable groups.
“The public security and industrial and commercial departments of the country will continue to carry out special rectification in key areas. the ministry said. “We will concentrate on destroying the pyramid-selling organizational system, severely punishing the members of the pyramid-selling field, annihilate and destroy the network pyramid- selling and criminal activities, [and] earnestly safeguard the legitimate rights and interests of the general public, as well as the economic and financial order.