The procuratorial organ intervened in advance and put forward more than 10 supplementary investigation opinions——
Uncover the 50 billion "blockchain" scam
Under the guise of "the largest capital market in the currency circle," blockchain technology and digital currency are used as a transaction medium to conduct online pyramid selling.
In just one year, it has developed more than 2 million members, with more than 3,000 hierarchical relationships, and the amount involved is more than 50 billion yuan...
The procuratorate of the Yancheng Economic and Technological Development Zone of Jiangsu Province prosecuted this network pyramid scheme under the cloak of "blockchain". On September 22, there was a first instance result: the court sentenced Chen, Ding, and Peng for organizing and leading pyramid schemes. The 16 defendants of a certain class were sentenced to fixed-term imprisonment ranging from two to eleven years, and were fined. The stolen goods, stolen money and fruits involved in the case, and criminal tools were confiscated and turned over to the state treasury in accordance with the law.
According to the reporter's understanding, this is the first extremely large transnational network pyramid scheme that used blockchain technology and digital currency as a transaction medium in China.
MLM old routines, put on the new "vest" of blockchain
At the beginning of 2019, the Yancheng Public Security Bureau found a platform named "PlusToken" that was suspected of engaging in network MLM during daily network inspections, and immediately established a task force.
The police found that from May 2018 to June 2019, Chen, Ding, Peng and others set up a "PlusToken" platform, and developed more than 2 million members.
In addition to domestic members, there are also many overseas members with more than 3000 hierarchical relationships.
In one year, this platform has absorbed more than 9.48 million digital currencies such as Bitcoin and Ethereum from members. According to the market conditions at the time, the total value of this platform is equivalent to more than 50 billion yuan.
Most of the digital currency is used to issue member "pull head" rewards, and some are cashed out for daily expenses and personal spending of Chen, Ding, Peng and others.
Why can the "PlusToken" platform absorb so many members?
Xu Yujie, the prosecutor undertaking the case and the head of the Second Prosecution Department of the Yancheng Economic Development Zone Procuratorate, introduced that the platform uses "blockchain" technology as a gimmick and uses Bitcoin and other digital currencies as the transaction medium to provide digital currency value-added services. Under the guise, promise high rebates and attract people who don’t know the truth to participate.
Chen and others have packaged the platform into a multinational company; Peng has a criminal history of MLM and has rich experience in MLM promotion; Ding has an identity and resources in the blockchain field and is familiar with blockchain technology.
Chen and Ding stipulate: Members must be recommended by the online and purchase mainstream digital currencies such as Bitcoin and Ethereum at least $500, and then join the membership with digital currencies to receive 6% to 18% of monthly income, that is Static income.
Member promotion members can also get dynamic income.
Dynamic income is divided into direct link income and indirect link income. Direct link income is 100% of the static income of each account offline at the first level; indirect link income is the income of each account offline from the second to the tenth level. 10% of static income.
In order to encourage members to develop more offline, the "PlusToken" platform launched the "executive commission" reward model.
According to the number of offline development and the amount of funds invested, members are divided into five levels: membership, big family, big coffee, great god, and creation, and the static income of offline is superimposed as rewards and rebates according to the level.
The platform creates "Plus Coins" as a settlement method for members' income.
"Plus Coin" has no value, and Chen controls its issuance quantity, price, ups and downs.
The "Plus Coins" earned by members can be sold to offline, or can be realized through the platform to become a mainstream digital currency, but the cashing requires a background manual review.
The static and dynamic bonus system settings of the "PlusToken" platform are similar to those of previous MLM platforms, except that the concept of blockchain and digital currency is added. There is no physical business activity. They rely on packaging and continue to develop offline to maintain the operation of the platform. The essence is still It's a "petty scam".
Guided investigation and tracked 450 bitcoins
After the public security organs filed the case for investigation, the Yancheng Economic Development Zone Procuratorate set up a special case team to intervene in a timely manner to guide the investigation.
Different from the previous network MLM cases, the “threshold fee” charged by the “PlusToken” platform for members is all mainstream digital currencies. The digital currency and RMB circulation methods are completely different. There is no transaction account and transaction flow. Who are the participants and who are the participants? What role does it play?
Where did the funds involved in the case flow?
The undertaking prosecutor put forward more than 10 supplementary investigation opinions on key issues such as key evidence and audit of the amount involved.
How do many involved in the case distinguish the nature of the behavior?
The undertaking prosecutors closely follow the nature of "pyramid marketing", and divide them into two levels, namely the initiating planner and the personnel who play a key role in the establishment and expansion of the organization, in terms of the role of the involved personnel in the organizational structure, the number of development levels, and the amount involved. According to the specific role of the role in the "PlusToken" platform, the organizer and leader are strictly identified in strict accordance with the judicial interpretation.
The procuratorial organs guided the public security organs to lock overseas servers through technical investigations, fix electronic evidence, and combine with relevant witness statements to form an effective evidence chain, which fully proved that the initiator Chen, the "military division" Ding, and the "operation" Peng, etc. The organization and leadership role played by the MLM organization, especially the use of evidence to lock Ding, who has always claimed to be just an ordinary member, as the principal offender. In the MLM organization, he hired foreigners as "puppets" under the guise of blockchain. Forging overseas backgrounds, etc., played the role of "military division".
How to find out the flow of funds?
The undertaking prosecutor will verify the whereabouts of the digital currency involved in the case based on the suspect's confession and the audit report provided by the public security organ, combined with the identification report.
During this process, the undertaking prosecutor found that 450 bitcoins were missing.
And the original holder of these 450 coins-Lu Moumou always argued that "the mnemonic phrase is forgotten and cannot be retrieved".
After comprehensively sorting out the confessions of Lu Moumou, Chen Moumou, Liu Moumou, etc., it was found that the final destination of the 450 coins all pointed to one person—Lu Moumou's brother Lu Moumou.
Lu Moulong has a certain reputation in the currency circle and was the founder of "Bizhi Finance".
Recommended by Ding to join, responsible for platform promotion and external publicity.
Based on the market value in June 2019, these 450 bitcoins total more than 40 million yuan.
The undertaking prosecutor analyzed that Lu Moulong had "played" in the currency circle for many years, and had a deep understanding of the currency circle, combined with its great value, it was impossible to make such a low-level mistake.
Therefore, the public security agency was guided to focus on Lu Moulong, radiate its surroundings, and monitor their communication equipment and wallet account addresses in real time.
After several inspections, it successfully recovered more than 200 bitcoins and more than 100,000 grapefruit coins (converted from the 249 bitcoins transferred), with a total value of nearly 30 million yuan (market changes).
Facing withdrawing a confession, the prosecutor calmly responded
Due to the large number of people involved, the large amount of money, and the overlapping of witness testimony, in order to achieve precise strikes, the Yancheng Economic Development Zone Procuratorate actively cooperated with the superior court, the public security, and the court to further unify the law enforcement standards and build a consensus on the handling of the case; at the same time, it focused on the characterization of the case before the court The status of the accomplices was divided into two aspects, and more than 30,000 words of court preparation materials were formed, and more than 60 responses were prepared.
On July 2 this year, the case was heard in court. 3 public prosecutors appeared in court and 14 defense lawyers.
In the court, Ding had a full confession in the face of the criminal facts charged by the prosecutors: "I have objections to the accusation of my planning brand. Chen only consulted with me about the App information and did not tell me the hierarchical model. I don't know this is a pyramid scheme."
Based on the facts of the case, the prosecutor used a well-designed interrogation outline to cross-examine with Ding in court: "Who developed the 336 members under your account? Isn't there any one in these 336 accounts who invested money?" "I don't know. "
The prosecutor continued to ask: "What is the specific division of labor in the platform for Zheng, Wang Hu, and Lu?" "Zheng is responsible for platform maintenance and technology development. Wang Mohu later succeeded Zheng in technical development. Responsible for promoting Plus." "How did they join?" "I introduced it to Chen."
...
The prosecutor also showed the WeChat chat records of Ding and Chen, confirming that the key development-related parts of the "PlusToken" platform name, organizational structure, reward mechanism, and operation mechanism were planned by Ding and Chen through consultation.
Ding still insisted on arguing that "I am just an ordinary member", but as the trial progressed, the criminal facts of his organization and leadership of pyramid schemes were exposed.
The prosecutor’s recommended sentences for Ding and the other four defendants who had retracted their confessions were all accepted by the court.
Ding was eventually sentenced to eight years and eight months in prison and fined RMB 4 million.
Lu Zhijian Fu Jing Zhou Yuqing