Beijing Handles First Case of Blockchain Virtual-Currency Pyramid Scheme Assistance; Tech Company Fined and Confiscated Over 930,000 Yuan

Oct. 29 — According to a report by the Beijing Daily client, the Haidian District Market Supervision Administration of Beijing has handled the city's first case of using blockchain and virtual currency technology to provide assistance to pyramid scheme activities. A tech company was fined and had assets confiscated totaling more than 930,000 yuan.

The tech company involved is an outsourced service provider for a public chain, offering support including operations, marketing services, publicity and promotion, exchange liaison and maintenance. The public chain launched the "Atomic Plan" and "Hathaway Plan," which center on rebates for recruiting new members, use the number of people recruited as the basis for rebates, and require participants to put in funds to obtain eligibility to join. Although it should have known that the public chain had pyramid scheme applications, the company continued to provide services such as technical operations and maintenance, external publicity, and maintenance of virtual currency trading channels, facilitating the flow of pyramid scheme funds and the spread of the activity. Ultimately, the public chain's pyramid scheme operation was handled by public security authorities and its organizers were criminally detained, while the tech company received an administrative penalty of fines and confiscation totaling more than 930,000 yuan for providing facilitating conditions.