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29 March 2024
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Police confiscate BRL 31 million in XRP from Chinese financial mega-pyramid

Chinese police took down a mega financial pyramid scheme that used Ripple’s XRP cryptocurrency to lure investors from northwest China’s Gansu province into the scheme.

According to Baibu, seven leaders of the “Ripple UnionPay Community” scheme were arrested in an operation carried out on Thursday (24) by the Baiyin City Department of Public Security.

During investigations, authorities managed to freeze and seize over 8.46 million XRP. The amount confiscated is equivalent to more than BRL 31 million, taking into account the price of BRL 3.86 that XRP registers this Sunday (27), according to CoinGecko.

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Items seized during Chinese police operation (Source: Baidu)

During the operation, the police also seized documents, computers and cell phones from the criminals.

XRP Pyramid

Chinese authorities have been investigating this Ponzi scheme for almost a year. In March 2021, the Baiyin Economic Crimes Investigation team discovered an app called “Ripple UnionPay Community” that was attracting people to invest in XRP.

Users were directed to the app through groups on popular platforms in China, such as QQ and WeChat, which disseminated information about Ripple’s cryptocurrency.

Users were then persuaded to buy XRP through the “Ripple UnionPay Community” app and thus activate the account and obtain membership.

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The app offered rewards to investors the more people they brought into the scheme, a classic pyramid financial strategy. The fraudulent platform even promised community promotions, operation and performance awards, among others.

During investigations, police discovered that behind the scheme was a gang led by two men identified as Wang and Zhang. The pair were arrested in this week’s operation along with five other suspects involved in the coup.

China’s Tense Relationship with the Crypto Market

China has always had a conflicted relationship with the cryptocurrency market, which intensified in May 2021 when the country decided to permanently ban bitcoin mining on its territory.

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At the same time, it once again banned the population from trading cryptocurrencies and financial institutions from facilitating crypto market services.

China’s long-running crackdown on cryptocurrencies came up again last week after the country’s Supreme Court issued an order that paves the way for fines and possible prison sentences for citizens who raise funds through cryptocurrencies.

Released on Thursday, the Chinese Supreme Court ruling specifies that transactions with “virtual currencies” used for fundraising are illegal, with various penalties available depending on the amount of money raised through these transactions.

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