China Cracks Down on Filecoin Pyramid Scheme, Threatens Crypto Industry
Chinese authorities are increasing their efforts to clamp down on the crypto industry following an $83 million pyramid scheme involving Filecoin. Lai Mouhang and four other executives of Space-Time Cloud Company are currently on trial for spearheading the fraudulent scheme.
Main Breakdowns:
- Space-Time Cloud Company formed in 2018 by Lai Mouhang and Lai Moujun
- Defendants actively promoted exaggerated rewards through a Chinese community website and WeChat public account
- The group created the filpool.io platform to publicize their distributed storage technology and mining rewards system
- In February 2021, defendants developed bpool.io for MLM activities to lure more participants
- Participants were encouraged to pay fees for mining equipment and were ranked for rebates and higher returns
The prosecution has deemed the defendants’ actions criminal as they defrauded participants and disrupted social and economic order. Further investigations are planned to hold them responsible.
Hot Take:
This pyramid scheme involving Filecoin highlights the need for stricter regulations in the crypto industry. China’s crackdown on such frauds is justified to protect investors and maintain order. However, it is crucial for authorities to strike a balance and not stifle legitimate innovation and growth in the industry.
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