Underground scams in the currency circle: pyramid schemes and funds are rampant, and tens of billions of wealth are harvested by black hands

a blockchain

(ID: yibenqkl), author Ratchet Pizza Light White, reprinted with authorization by Odaily.

In the currency circle, routines such as pyramid schemes, funds, air coins, and false propaganda emerge in endlessly.

In front of the tempting benefits, some ignorant people are unfortunately caught in the trap, and some people are still willing to take the risk when they know it is fraudulent.

However, this is an extremely dangerous game. Going bankrupt and wanting to cry without tears is often the final outcome of the participants.

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01 MLM currency

"I have a good money-making project here, and I recommend it to you." In August last year, Wei Jingming, an employee of a state-owned enterprise in Xi'an, received a WeChat message from a colleague.

The project is called MCC, and the Chinese name is "Miner Classic Coin". Wei Jingming was told that MCC is a token issued based on the blockchain project Mchain, and blockchain is "the general trend of the future".

"You will never lose money. If you only invest in 'cloud mining machines' and do not promote them, you will be able to pay back in three and a half months." A colleague told him, "You can also introduce more people to invest like me, so that you will make more money. quick".

Soon, Wei Jingming received a Mchain white paper from his colleagues.

The typesetting of this white paper is rough and there are frequent typos. It introduced that Mchain is a "community" and "ecosystem" serving the gaming and gaming industries. Users can have three ways to make money based on Mchain: buying mining machines, promoting and speculating.

Among them, currency speculation is the least recommended by Mchain because of "high investment and high risk". What Mchain officially encourages is "buying mining machines" and "promoting".

The so-called "buy mining machine" refers to Mchain's official purchase of "MCC cloud mining machine". Their price ranges from 5,500 yuan to 180,000 yuan, and the more expensive the higher the coin production. The "MCC cloud mining machine" worth 180,000 yuan can produce 28.96 coins per day, calculated at 60 yuan each, and the payback time is 104 days.

But these cloud mining machines are more like a virtual account that can "produce coins out of thin air". Mchain has never introduced its own mining mechanism.

Although it has nothing to do with IPFS, Mchain has also launched a physical mining machine that claims to be based on IPFS mining. Its price is as high as 6300 yuan, and an additional 0.5ETH hosting fee is charged, far exceeding the common IPFS mining machines on the market.

And its exclusive function is ironic - plug in the U disk, it can play music as MP3.

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The income channel and mining machine payback cycle given in the Mchain white paper

Set entry thresholds, encourage investors to pull down the line, and provide high multi-level rebates... This model is no different from pyramid schemes.

A noteworthy issue is that Mchain’s white paper avoids the most important information in the blockchain white paper-technical architecture and team members. The biggest "highlight" of the entire white paper is the large-screen advertisement that Mchain put on Nasdaq.

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Mchain also left the above "homework questions" for readers in the white paper

After realizing that this might be a scam, Wei Jingming persuaded his colleagues to "turn back and do the same", but it didn't work.

In September 2018, Mchain announced that it was acquired by the US SINOC Group. SINOC once sold mining machines under the banner of "IPFS community", but was slapped in the face by the latter. In the currency circle, it also has a bad reputation.

But Wei Jingming's colleagues are already caught up in it. He announced in a high-profile circle of friends: "Finally, we can justifiably sell mining machines."

Under the banner of digital currency and blockchain, Mchain is not the first, and it will never be the last.

Take OneCoin, the first generation MLM currency, as an example.

There are many victims of Onecoin, and the amount involved in this project in China alone is as high as 15 billion yuan.

Just a few days ago, the US FBI announced that it had arrested Onecoin leader Konstantin Ignatov.

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02 Funds

In addition to the rampant MLM coins, another abhorrent chaos in the currency circle is the raging funds.

"Now, the hottest funding project in the currency circle is PlusToken." Zhang Jin, who invested in the project, told a blockchain reporter.

PlusToken claims to be a "multi-currency cross-chain wallet" and a "decentralized trading platform". In promotional materials, PlusToken refers to itself as "the Yu'e Bao of digital currency".

"Different from other wallets, PlusToken can enable a function called 'smart dog', which can automatically 'move bricks and arbitrage', and the monthly income can reach as high as 10%-35%." Zhang Jin said.

The so-called "automatically moving bricks" means that when a certain currency has a price difference on different platforms, the system can buy it on a low-price platform and sell it on a high-price platform to earn the difference.

To enable this function, you need to recharge your wallet with digital currency worth more than $500.

Wanqing, an "investment teacher" in the PlusToken user group, told a blockchain reporter, "Deposit 1 million equivalent tokens on PlusToken, start 'arbitrage with bricks', and reinvest the proceeds. Earn more than 7 million."

PlusToken claims that users can withdraw coins to leave the market at any time, but has designed a threshold for withdrawing coins - within 28 days, a 5% handling fee will be charged; after 28 days, a 1% fee will be charged. "The purpose is to allow users to save coins for a few days longer." Zhang Jin said.

There is no separation between funds and pyramid schemes. PlusToken also adopts the multi-level rebate mechanism of MLM.

Promoters of PlusToken have ten levels of commission rewards. The rebate of "direct promotion to the first floor" is as high as 100%, and the rebate from the second floor to the tenth floor is 10%.

"You can charge only $500 for the large size, turn on the 'smart dog', use the small size to move bricks, and add rebates, and you will have double the income." Wanqing explained.

Under the high rebate, inviting investors to join PlusToken can also make a lot of money. "Suppose you attract 10 valid users, and each of them pays a 'membership fee' of 500 US dollars, you can also earn 500 US dollars per month." Zhang Jin said, "This is why people send out PlusToken invitation codes everywhere. .”

However, is there such a good thing in the world?

"The price difference between exchanges in the currency circle is very low now, and it will be filled soon. It is impossible to have more than 10% monthly income." Digital currency quantitative trader Sun Da told a blockchain reporter.

In his view, PlusToken is an out-and-out capital market, and moving bricks is just a gimmick.

Before PlusToken, the hottest capital market in the currency circle was undoubtedly BHB.

On December 4, 2018, "Sister Feng" Luo Yufeng posted a Weibo, calling on everyone not to miss BHB. The slogan of "Three-level commission rebate, 11% daily dividend" has brought BHB into people's attention.

In order to attract more investors, the BHB team even chanted the slogan "1 million cash will be distributed to 500 people in the WeChat group".

Holding coins for dividends is the most "simple and crude" mode in the currency circle fund market, and people in the world call it "dividend plate". Unlike the victims in the MLM currency scam, speculators who devote themselves to the fund market are often aware of the risks.

But they all believe that they will not become the "taker" when the funds collapse.

Witnessing the rising price of BHB currency and the rising dividends, the player Luo Xingsi also took out 5 bitcoins to join the BHB gamble. "I know it's a game of who can run faster," he said.

At the same time as BHB collapsed, ZXC and LEX, the "dividend boards" with almost the same model, also failed to escape the fate of the collapse.

Under the creed of "seeking wealth through insurance", some investors became rich overnight due to capital trading, but more people became victims.

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03 Other chaos

In the eyes of many practitioners, the reason why the blockchain industry has been questioned is inseparable from the "blooming everywhere" scam projects.

Air coins, ICO scams, project fraud, beauties acting on behalf of investors...the scams in the currency circle and the chain circle can be described as full of tricks.

In May 2018, the Shenzhen police announced that they had cracked the "Puyin Coin" fraud case. There were 3,000 victims in this case, and the amount involved was as high as 307 million yuan.

Puyin Coin is a digital currency issued by Shenzhen Puyin Blockchain Group Co., Ltd. The group claims that this is "the world's first standard digital currency" - "behind every common silver coin, there is an equivalent physical Tibetan tea as collateral."

However, the police investigation found that the company was manipulating the price of ordinary silver coins in the background, and the "physical hidden tea mortgage" did not exist.

In addition to outright fraudulent projects like Puyincoin, there are still many blockchain projects that have false propaganda. Among them, team member information falsification is the most common situation.

Taking MDC as an example, the two team members shown in its white paper are actually the same person. His background identity is also fictitious.

The same is true for the blockchain project "MIROSKII". In the white paper of the project, real estate brokers are fictitiously represented as CEOs of several Internet companies, and lawyers are fictitiously represented as engineers. In fact, most of the team members of the project are actually advertising models.

In the currency circle, another field full of routines is "ICO proxy investment".

After "9.4", ICO was classified as "illegal fundraising" in China, but domestic investors still flocked to ICO. Their choice is "substitute investment".

Unexpectedly, some proxy investors will steal their shares, and some will run away with the money directly.

Among the "surrogate voters running away" cases, the "Li Shiqin" case may be the most well-known one. In March 2018, a number of RFR (Refereum) investors broke the news that a proxy investor named "Li Shiqin" refused to issue coins after taking away 18,000 ETH and blackmailed investors. According to the currency price at that time, the amount involved in this matter was as high as 90 million yuan.

Some investors believe that "Li Shiqin" may just be a fake identity carefully planned, and there are other people behind the scenes. But to this day, the case is still an unsolved mystery in the currency circle.

The scammer cashed out and left the market, while the investors wanted to cry without tears. In the currency circle, one after another "dead coins" that have already returned to zero, like tombstones, alert latecomers.

According to the statistics of the Coinopsy website, there are currently 545 "dead coins" confirmed worldwide.

What is a "death coin"? The definition given by the Coinopsy website is a digital currency that has been abandoned, the website is dead, there is no node, there is a problem with the wallet, and the social network is down. As long as one or more of these characteristics are met, the currency can be declared "dead".

In the eyes of some, many digital currencies have no value in themselves, and it is investors who give them value. If all investors leave the market, these digital currencies will all return to zero.

In the face of interests, the evil of human nature is infinitely magnified. The consequences must be borne by everyone.

* Some interviewees in this article are pseudonyms.