Police in the Chinese city of Xian arrested the founders of the crypto-pyramid, which managed to raise 86 million yuan ($ 13 million) with the participation of 13,000 investors. This is reported by CoinDesk.
The scheme was launched on March 28 this year after several months of preparation.
The police said that in order to attract investors, the Da Tang Coin (DBTC) cryptocurrency was used, connected with DTC Holding, which was registered in Hong Kong and was controlled by suspects.
During various promotional events held in many locations throughout the country, the scheme's organizers stated that the new members could start earning 80,000 yuan ($ 13,000) a day, buying a DBTC of $ 0.50 per token for $ 480,000.
The profitability of the token was to be ensured by commissions after the creation of controlled networks and access to exchanges.
To make the scheme look more convincing, scammers hired a man with the appearance of an foreigner for the role of chairman of DTC Holding, the police said. According to their idea, such a trick would make investors believe that they are dealing with an international blockchain start-up.
Reports on the activities of DTC Holding were published in various Chinese media. So, on March 21, the China Daily published the news that the chairman and CEO of the company, Yevgeny Subbotin, visited the blockchain-event in Xi'an.
The message also says that DTC Holding is actively promoting its digital currency, promising that it will soon be listed on such exchanges as Shangya, U-Coin and ZB.com. Subbotin stated that the token will be used in the real world, including for making payments, in the sphere of hotel business and education.
The Xian Police initiated the investigation on April 5 after they began receiving messages from residents of the region affected by the scheme.