China Signals A Clampdown On Digital Currency Pyramid Schemes

The Ministry of Public Security in China along with the State Administration for Industry and Commerce (SAIC) have decided to work together and put an end to the spread of online pyramid schemes.

The news comes from a ministry notice that states that public security organs have detected a large number of pyramid schemes happening in the country and linking to cryptocurrencies (without a valid link though).

Even though progress has been made against such pyramid schemes, the activities are still a problem and the Internet pyramid schemes can cause major economic losses to masses of people or negatively affect the social credit system.

The situation is still not under full control. That is why the joint action between the Ministry and the State Administration focuses on different types of multi-level marketing (MLM) activities that are seen as “rebate consumer”, “mutual funds”, “virtual currency”, “investment management” and “online games”.

These categories all fall down under types of criminal activity, as well as the pyramid selling activities for disadvantaged groups such as students, subsistence allowances and disabled people.

The target are MLM organizations that assist in the transfer of funds. A special action that is known as “net net 2018” will work to prevent the cyber attacks too and promote certain website registration while supporting the inspection of advertisements.

 

The notice stated:

“We will conduct all-round and efficient inspections and dispositions and make great efforts to purify the cyberspace so as to comprehensively promote the establishment of ‘MLM-free network platform’ and ‘MLM-free communities,”

 

From all this, it is evident that the security organs in China will also offer advice to government organizations and promote the status of network marketing, opening the eyes of the public and punishing all members of the pyramid selling organizations embracing the ‘ponzi’ scheme.