A gang in Fujian, China organized pyramid schemes in the name of virtual currency and NFT, and the second instance court rejected its appeal

According to ChainCatcher, the gang built a hierarchical reward mechanism based on invitation relationships in the name of issuing a certain virtual currency from May to August 2023, forming groups through social platforms, conducting online and offline promotion, and promoting to the public, inducing participants to obtain qualifications through purchasing virtual currencies, pledging assets, bidding for virtual cards, etc., and obtaining rebates based on the number of offline development. By October 2023, the organization had developed multiple levels, and the funds absorbed were equivalent to more than RMB 20 million. The Shishi City Procuratorate of Fujian Province reviewed and determined that although the organization uses emerging concepts such as virtual currency and NFT to package, its operating model still complies with the crime of organizing and leading pyramid schemes stipulated in the Criminal Law of the People's Republic of China: First, the project sets up "threshold fees" in disguise by purchasing virtual currency and participating in private placement and paying virtual assets, as a prerequisite for joining and developing others; second, establishing a clear superior-lower relationship and hierarchical structure, using the number of personnel and the performance of subordinates as the basis for remuneration and rebate; third, there is no real business activities and a source of sustainable income, and the funds are dependent on the operation of the funds to be transferred to the member to pay the precedent income, which has obvious characteristics of defrauding property. Li and others created the illusion of profit by manipulating backend parameters and artificially interfering with the so-called "synthesis probability" and "release mechanism", and inducing participants to continue to invest and develop downlines. This is a use of new technology concepts to cover up traditional pyramid scheme crimes, seriously infringe on the property rights and interests of the masses, and disrupt economic and social order. In June 2024, the Shishi City Procuratorate filed a public prosecution against members of the gang in accordance with the law. In December 2024, the court sentenced four defendants to six years and six months in prison for organizing and leading pyramid schemes in the first instance, and fined them to recover illegal gains. After the defendant filed an appeal in dissatisfaction, in July 2025, the second instance court ruled to reject the appeal and uphold the original judgment.