Shanghai police have busted an online pyramid scheme that used cryptocurrencies worth more than 100 million yuan (US$15.7 million), the latest example of China’s ongoing crackdown on fundraising activities involving digital tokens. The company alleged to have committed the crime established a platform in June 2020 that claimed to offer “services to appreciate cryptocurrency”. Users were asked to exchange their fiat currency for platform tokens to gain membership, which came with incentives, but the tokens “had no market value” and their price “was controlled by the platform”, state-owned Xinhua News Agency reported on Wednesday, citing the Shanghai Municipal Public Security Bureau. Users were also rewarded for new account referrals. By the time police arrested more than 10 suspects in the case, the platform had 60,000 member accounts across 72 levels of hierarchical relationships and membership status, the police said. China’s share of bitcoin trades plummets after cryptocurrency crackdown The company had located its servers overseas, a move likely aimed at circumventing Chinese regulations that have since 2017 banned all forms of raising capital through the issuance of digital tokens, referred to as initial coin offerings. The Chinese government has taken a firm stance against cryptocurrencies. It banned Chinese banks from dealing in bitcoin in late 2013, when its price was under US$1,000, a fraction of today’s value. It is not the first time authorities in China have hunted down perpetrators of cryptocurrency fraud. In November 2020, a Chinese court sentenced the ringleaders of a multinational cryptocurrency-based pyramid scheme to 11 years in prison after they defrauded investors out of 14.8 billion yuan (US$2.25 billion) worth of cryptocurrencies, according to court documents from the eastern province of Jiangsu. PlusToken, a platform set up by Chen Bo in early 2018, used decentralised ledger technology known as blockchain to attract millions of people who were required to pay membership fees in cryptocurrencies. The platform offered high investment returns based on the number of members they recruited and investment amounts, according to a criminal ruling published by the Intermediate People’s Court in Yancheng, a city in Jiangsu. The latest cases show there is no let-up in China’s crackdown on cryptocurrency-related financing activities. The Supreme People’s Court, the nation’s top court, said last month that cryptocurrency fundraising was now considered a criminal offence, and serious cases involving more than 50 million yuan or a network of over 5,000 people could result in more than 10 years in prison. The final verdict in the Shanghai case has not been announced. In May 2021, the Financial Stability and Development Committee under the State Council, the nation’s cabinet, said it would “crack down on bitcoin mining and trading behaviour and resolutely prevent the transfer of individual risks to society”.