According to BlockBeats, on September 19, according to the Chutian Metropolis Daily, the Zhongxiang City Procuratorate of Hubei Province recently filed a public prosecution against Chen and three others for organizing and leading pyramid schemes. After a legal judgment, Chen and three others were convicted of organizing and leading pyramid schemes and were sentenced to three years in prison, suspended for five years, and fined RMB 350,000. At present, the relevant judgment has come into effect.
The police investigation found that a pyramid scheme led by Chen, Ding and Fu decided to issue their own virtual currency to earn profits. “The prosecutor in charge said that Chen, Ding and Fu agreed on the promotion model, reward system, profit distribution mechanism and other matters, and traveled to other places to find Lu, the head of a software design company (handled in another case), to develop a virtual currency software APP. In February 2022, the APP was officially launched.
On February 19 of the same year, Chen and three others held a press conference for the APP and called on their friends to participate in the virtual currency project. At the same time, they established a pyramid scheme organization “XXX Community” under the pretext of investing in the virtual currency project.
In order to improve the promotion efficiency, Chen and two other persons used the Internet platform and held offline training sessions across the country to promote the virtual currency project. They developed members through the “XX community” and lured others to invest in and purchase virtual currency to become members and develop downlines.
The prosecutor in charge said that Chen and his two friends gave corresponding rebates to the upline members according to the number of downline members they developed and the amount of fees paid by the downline members, thus forming an upline and downline hierarchy. After several months of careful promotion, the organization grew rapidly. For the convenience of management, the three people divided the organization into five major battle zones and 16 pioneer groups according to the region, and selected key members to be in charge of each of them. The five major battle zones organized members to hold morning meetings every day through online chat software, calling on members to complete the performance tasks assigned.
As of the time of the incident, the APP had more than 10,000 registered member accounts, with the highest level being 17, and the amount involved in the case was more than 57 million yuan. “The virtual currency has no actual value, and the project has no real business activities. It relies entirely on the continuous development of downlines to maintain operation. The money earned by the upline is actually the money invested by the downline. Once there is no continuous downline investment, the project will collapse.” The prosecutor in charge said that Ding, Fu, and Chen directly or indirectly developed more than 41 downlines through the APP, and their organizational form has constituted a pyramid scheme in the sense of the criminal law.
On January 11, 2023, Chen, Ding, and Fu were arrested by police. After being brought to justice, the three truthfully confessed to the crime and voluntarily returned all illegal gains of more than 22.59 million yuan.
On December 22, 2023, the case was transferred to the Zhongxiang City Procuratorate for prosecution. The prosecutor in charge believed that the actions of Chen, Ding, and Fu were clear in facts, reliable in evidence, and sufficient in evidence. Their actions violated Article 224 of the Criminal Law of the People’s Republic of China and constituted the crime of organizing and leading pyramid selling activities. After the court filed a public prosecution in accordance with the law, the local court made the above judgment.
