China’s Filecoin Project Faces $100 Million Pyramid Scheme Lawsuit

News | August 15, 2023 By:

China’s People’s Court of Pingnan County recently conducted a public hearing on a major pyramid scheme case related to one of the leading projects on Filecoin. The case centers around five executives from Shenzhen Space-Time Cloud Company who stand accused of orchestrating an elaborate pyramid operation that scammed participants out of nearly $100 million.

In June 2018, defendants Lai Mouhang and Lai Moujun established Space-Time Cloud Company. Over the next year, they brought on additional executives Hu, Liang, and others. According to prosecutors, Lai Mouhang aggressively expanded the company’s operations in September 2019, using the ipfs.cn domain to market investment opportunities related to Filecoin’s distributed storage model and token rewards system.

The defendants allegedly mirrored Filecoin’s mining rewards structure through their own platform, filpool.io, which promoted joint Filecoin mining by selling storage servers. Prosecutors say the defendants exaggerated profit projections to lure participants into purchasing cloud computing power, starting at 8TB for bronze membership. The more they invested and recruited others, the greater the promised returns in this classic pyramid structure.

In total, prosecutors claim the schemes attracted over 57,000 members and amassed neraly $100 million worth of investments and cryptocurrencies. They argue the executives used deception to defraud participants and disrupt economic order in violation of criminal law.

The case is still under investigation but could set an important precedent in China for how cryptocurrency schemes are regulated and prosecuted. It also serves as a broader reminder to thoroughly research any crypto investment opportunities and be wary of promises that seem too good to be true. Even legitimate projects like Filecoin can become intertwined with illegal activities if not monitored closely.

 

Source: BeInCrypto