Five executives of the Filecoin mining service are being sued in the People’s Court of Pingan County, China, on charges of embezzling millions of dollars and ruining investors through an elaborate pyramid scheme.
Local media reported on August 14 that a court held a public hearing on a case that could set a precedent for how cryptocurrency schemes are prosecuted and regulated in China.
Shenzhen Space-Time Cloud Technology executives are accused of setting up a pyramid scheme that accumulated approximately $100 million and defrauded their investors.
According to the report, defendants Lai Mouhang and Lai Moujun founded the company in 2018. In the following years, it employed additional executives and expanded its operations to promote investment opportunities related to Filecoin’s rewards system and business model.
Prosecutors alleged that the defendants provided exaggerated profit projections to entice investors in their Filecoin mining enterprise. The lawsuit asserts that the defendants sold storage servers with the promise of high returns through a pyramid scheme.
The prosecutors assert that over 57,000 consumers contributed $100 million to the company. According to the prosecutors, the executives violated economic order by defrauding participants through deception.
In the meantime, the Chinese authorities have facilitated a crackdown on cryptography and deepfake artificial intelligence. On August 10, Chinese authorities reported 79 cases of fraud involving deepfake AI, leading to the arrest of 515 people. Concurrently, authorities apprehended 21 individuals suspected of involvement in a $54 million Tether USDT money laundering scheme.
