Chinese Filecoin Mining Firm Accused of Orchestrating $83 Million Pyramid Scheme

Crypto News, A prominent Chinese Filecoin mining company, Shenzhen Shikongyun Technology, and its four executives are facing allegations of involvement in an $83.3 million pyramid scheme.

Chinese Filecoin Mining Firm Accused of Orchestrating $83.3 Million Pyramid Scheme

The trial, which recently began in a local court in Pingnan county, Guangxi autonomous region, sheds light on the alleged misconduct within the cryptocurrency industry, particularly in the aftermath of China’s ban on crypto transactions in September 2021.

Pyramid Scheme Allegations

Shenzhen Shikongyun Technology and its founder, surnamed Lai, are accused of orchestrating a pyramid scheme by enticing users to mine FIL coins through their platforms. The defendants allegedly persuaded individuals to pay fees for purchasing mining equipment or leasing mining machines in order to participate in the scheme.

Promising substantial returns, the company reportedly attracted thousands of users and amassed significant assets, disrupting economic and social order.

Inappropriate Promotion and Financial Gain

The company operated platforms such as filpool.io and bpool.io, along with a website domain named ipfs.cn, to promote its services. These platforms allegedly played a role in misleading users and facilitating the pyramid scheme. By the time Chinese authorities intervened in May 2022, the company had managed to accumulate a staggering 606.95 million yuan (approximately $83.3 million) through these channels.

Global Expansion Plans and Fallout

Despite the risks associated with operating in mainland China, Shenzhen Shikongyun reportedly had intentions to expand overseas before its executives were apprehended. The company’s former employee disclosed that efforts were underway to explore international markets for growth. However, the executives’ arrest halted these plans, further emphasizing the challenges faced by cryptocurrency businesses within the country.

A summary

The trial of Shenzhen Shikongyun Technology and its executives highlights the continued scrutiny of cryptocurrency-related activities in China. The allegations of an $83.3 million pyramid scheme raise concerns about the potential risks associated with investment in the crypto industry. As regulatory dynamics evolve, the case underscores the importance of transparency, accountability, and compliance within the rapidly changing cryptocurrency landscape.