TechFlow news, according to the official WeChat account of Chenggong District People's Court in Kunming City, the Chenggong court recently handled its first case involving the organization and leadership of a pyramid scheme centered on an online virtual currency platform. Since 2019, without any actual business operations, suspect Yang and others promoted the "XX Eagle" project as a blockchain-based financial investment platform originating from a foreign country, falsely claiming it was guaranteed by overseas banks and funds. They further fabricated that DAM tokens (commonly known as "Eggs" or "Egg Coins") on the "XX Eagle" platform could be exchanged one-to-one with the virtual currency USDT (commonly referred to as "U Coins" or "Tether").
To obtain funds, Yang and others lured participants into depositing USDT into the "XX Eagle" online platform and encouraged them to recruit lower-level members across multiple regions using referral codes. Membership levels were categorized into four wealth tiers (Wealth Level 1–4), based on the number of recruited members and the amount of deposited funds, forming a multi-layered organizational structure. Rewards were distributed directly or indirectly based on the number of recruited individuals, deposited amounts, wealth tiers, and hierarchical levels. Deposited funds, along with fictitiously inflated returns and commissions, were displayed on the "XX Eagle" platform in the form of DAM tokens according to predetermined proportions and rules.
Based on forensic blockchain asset analysis and judicial accounting appraisal, by May 30, 2022, the total amount of USDT deposited by participants in the "XX Eagle" project reached 9,762,260.02, equivalent to over 65 million RMB. The Chenggong court sentenced defendant Yang and others for organizing and leading pyramid scheme activities, imposing fixed-term imprisonment ranging from one to six years and imposing fines. Over 13 million RMB in illicit gains have been confiscated, along with涉案 mobile phones and USB drives, which were lawfully seized.
