It was a tough week for Crypto-MLM operators in Asia. governments, as well as regulatory authorities in several countries in Asia, have announced that they will go for all fraudulent and/or unlicensed operators of crypto-investment schemes. Earlier this year, China’s Ministry of Public Security and the State Administration for Industry and Commerce (SAIC) began country-wide investigations to put an end to crypto-related MLMs.
Consequently, it should not come as a surprise that operators of fraudulent Crypto-MLM schemes in South Korea and China have been sentenced and arrested respectively this week.
Two accused men in South Korea were sentenced for creating a crypto-based pyramid scheme and cheated investors by some 20 billion. According to a judge from Seoul’s Incheon District Court, the two were sentenced to a fine of $8 million and $15 million respectively on April 19th, 2018. In his judgment, the judge stated:
The multi-level transaction is a risk to the socioeconomic order with mass production of many victims,
China’s local newspaper reported that Xi’an police arrested people involved in a crypto-pyramid scheme purporting to be a blockchain platform. The suspects created the “DBTC” platform and made it available for users from Mar. 28 to Apr. 15 this year. Almost 13,000 people registered and invested a total of 80 million Yuan ($13 million) in the scheme. The Crypto-MLM launched in Oct. 2017, one coin was sold at the price of 3 yuan (US$0.48). The team also traveled to Cambodia, Phnom Penh, Xi’an and Ningbo to promote their MLM. Investors were required to invest 3 million yuan ($0.4 million) initially, to receive 80,000 yuan ($12,732) every day and more than 2 million yuan ($0.3 million) a month. The extremely high returns should have been a red flag but many people didn’t care an lost their investments. Allegedly, more than 13,000 people invested into this scheme. Unbelievable, right?
Last week, the Vietnamese company Modern Tech reportedly ran off with roughly $658 million in ICO funds. In response, Prime Minister Nguyen Xuan Phuc has urged regulators and government officials to strengthen their monitoring and regulation of cryptocurrency projects, especially ICOs.
You don’t need to need a crystal ball to predict that we well see a lot more arrestments and court cases around Crypto-MLMs and ICOs over the months to come. Investors should be very aware of that.