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China Moves to Hack the Digital Currency Pyramid Schemes

China’s public security ministry said on Friday that it will target on pyramid schemes in the country, including those that presumably involve cryptocurrencies.

In a Jan. 19 report, the Ministry of Public Security revealed its plan to crack down on pyramid fraud, or financial schemes in which participants are offered to sell some kind of good while also soliciting others to create sales networks of their own. Some of the most popular digital currency pyramid schemes include OneCoin, which as reported last week is the aim of an international, multi-agency crackdown.

The ministry said in a translated statement:


“The public security organs and industrial and commercial departments of the country will continue to carry out special rectification in key areas and…focus on destroying the pyramid selling organizational system, severely punishing the members of the pyramid selling field, annihilate and destroy the network pyramid selling and criminal activities, [and] earnestly safeguard the legitimate rights and interests of the general public as well as the economic and financial order.”


The statement doesn’t make clear to what degree it will focus on schemes that claim to involve a cryptocurrency, versus pyramid schemes related to other kinds of goods.

Furthermore, the mention signals that officials will apply research to some of the schemes involved. Previously, frauds such as Gemcoin have resulted in thousands of Chinese citizens being tricked, and OneCoin has been known to have a presence in China as well.

It remains to find out if China will move toward more forceful edicts, as shown in the case of the ICO ban last year. As reported by CoinDesk at the time, officials in China blocked the blockchain funding model, considering it to be an illegal form of fundraising.