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Chinese police arrested the founders of alleged $13 million blockchain pyramid scheme

Police in China’s northwestern city of Xi’An have arrested the founders of a claimed nationwide cryptocurrency pyramid scheme that allegedly amassed 86 million yuan ($13 million) from over 13 000 people.

The scheme launched on March 28 this year after months in preparation by a primary suspect surnamed Zheng, as well as three other accomplices.

The police said the scheme used a cryptocurrency called Da Tang Coin (DTC) that is linked to DTC Holding, a company under the suspect’s control and registered in Hong Kong, to allegedly deceive potential members of the pyramid scheme.

In promotional events in multiple cities in the country, the scheme claimed that new members can make 80 000 yuan (about $13 000) per day with an initial investment of $480 000 to purchase the DTC at $0,50 per token.

To make the project more convincing, suspects hired a foreign-looking man to be the chairman of DTC Holding with the aim to build its company image as an international blockchain technology startup.

According to China Daily piece from March 21, the chairman and general manager of DTC Holding, Evgeny Subbotin promised that DTC would be adopted in several real-life use cases including retail payments, hospitality, and education. The company had also touted the potential of DTC, saying it would be listed on several exchanges such as Shangya, U-Coin and ZB.com.

The Xi’An police force started the investigation on April 5 after receiving complaints from the city’s residents who had become involved in the scheme.

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