Recently, Haikou City police cracked a network virtual currency "Asia-Europe Coin" in the name of a large network marketing case. Ltd. (referred to as the cross Asia-European company) only one year in the national scope of the development of a number of provinces and cities in the internal and external disk members more than 47,000 people, the amount of money involved in the 4.06 billion yuan. Under the banner of state-owned enterprises and experts in the industry, the company operated on an Internet marketing platform, and then held promotional meetings and forums to publicize its legitimacy and beautiful vision, causing a large number of investors to be cheated. With the company's capital chain on the verge of breaking, investors "high return points, high yield" dream broken.
In fact, the business model of TransAsia Europe is a typical pyramid scheme.
What is virtual currency?
People not engaged in the financial industry is estimated to be a little strange to the network virtual currency. Look at Baidu's definition of virtual currency: broadly speaking, the network virtual currency refers to the issuance of a certain subject to the public information network as the basis for computer technology and communication technology as a means to digitalize the form of storage in the network or the relevant electronic equipment, and through the network system (including smart cards) in order to achieve the circulation of the data transmission and payment function of the online equivalents; narrowly speaking, the virtual currency refers to a new form of money different from the Narrowly speaking, virtual currency refers to a new form of currency that is different from tangible currency, which is issued by some large companies and usually appears in online games, and is often used as the payment currency for virtual transactions because it has a certain scale of value.
That is to say, virtual currencies are surrogate currencies that circulate in the virtual world of the Internet and refer to non-real currencies. Well-known virtual currencies such as Baidu's Baidu Coins, Tencent's Q Coins, Q Points, Shanda's Point Coupons, micro-coins launched by Sina (used in micro-games, Sina Reading, etc.), Chivalry Yuanbao (used in Chivalry Dao games), grain silver (used in Bixue Xuexiangtian games), etc., and there are hundreds of digital currencies issued all over the world at the present time. At present, the virtual world of network trading has greatly exceeded people's conception, has formed a production, supply and sale of a huge online trading market. Moreover, there is a professional working family specializing in "playing coins"; there are also exchange stores specializing in exchanging various kinds of game coins.
The most famous virtual currency is Bitcoin. Bitcoin (Bitcoin: Bitcoin Gold) was first a virtual currency on the Internet, with limited quantities, similar to Tencent's Q-coins, but it can already be used to purchase real-life items, and can also be cashed out and exchanged for the currencies of most countries. It is characterized by decentralization, anonymity, can only be used in the digital world, does not belong to any country and financial institutions, and is not subject to geographical restrictions, can be exchanged anywhere in the world, and therefore used by some criminals as a money laundering tool. 2013, the U.S. government recognizes the legal status of Bitcoin, which makes the price of the Bitcoin soared. And in China, on Nov. 19, 2013, one bitcoin was equivalent to 6,989 yuan.
On May 12, 2017, there was a global outbreak of a bitcoin virus frenzy attacking public **** and business systems. The National Health Service (NHS) was thrown into chaos when over 40 hospitals across the UK were hit by widespread cyber hacking. Several Chinese university campus networks have also fallen en masse. Close to 74 countries around the world have been severely attacked.
Virtual currencies are not pyramid schemes per se, but virtual scams under the guise of Bitcoin or virtual currencies are commonplace, and in reality they have nothing to do with virtual currencies.
Ponzi Schemes
Marketing scams are ultimately Ponzi schemes. Ponzi scheme is the name given to investment fraud in the financial sector, the originator of the Pyramid scheme. This scam was "invented" by a speculator named Charles Ponzi, and is used by many illegal pyramid schemes to collect money. Ponzi scheme in China is also known as "tear down the east wall to mend the west wall", "empty gloves white wolf". In short, it is the use of new investors' money to pay interest and short-term returns to the old investors, in order to create the illusion of making money and then cheat more investment.
*** Characteristics
A variety of "Ponzi" although a variety of variations, but essentially have a "grandfather" Ponzi inherited from a lineage of **** characteristics.
Low-risk, high-return anti-investment law
As we all know, risk and return is proportional to the iron law of investment, "Ponzi scheme" is often the opposite. Fraudsters tend to attract unknowing investors with higher rates of return, and never emphasize the risk factor of investment. Various cases of return may vary, some outrageously high, such as Ponzi promised investment in 45 days can get 50% return, some of them are solid extraordinary returns, such as Bernie Madoff each year to customers to ensure that the return is only about 10%, but he emphasized very much that "the investment must earn, never lose". But in any case, the scammers always try to devise investment paths with much higher than average market returns, without ever revealing or emphasizing the risk factors of the investments.
The capital transfer and replenishment feature
Because it is simply impossible to realize the promised return on investment, the return on investment for old customers can only be realized by new customers joining the scheme or other financing arrangements. This places a high demand on the capital flow of a Ponzi scheme. As a result, scammers always try to expand their clientele and widen the size of the funds they absorb in order to have enough room to move the money around and make up for it. Most of the crooks never refused to add new money to join, because the cake is bigger, not only to seize the benefits of more substantial, and the risk of a break in the capital chain is greatly reduced, the scam lasts a long time can be greatly extended.
Investment know-how of the unknowable and unrepeatable
Cheaters try to render the mystery of investment, investment know-how secret, and strive to shape their own "genius" or "expert" image. In fact, due to the lack of real investment and production support, the crooks simply do not have to scrutinize the "way of life", so try to maintain the mystery of the investment, to promote the investment can not be replicated is one of the effective tactics to avoid external questioning. The Boston Globe Times reporter once wrote an article exposing Ponzi's scam, but Ponzi refuted it on the grounds that he "did not understand financial investment". Bernie Madoff, too, never told anyone about his knack for making a solid 10 percent a year on his investments.
Investment counter-cyclical characteristics
"Ponzi scheme" investment projects seem to never be affected by the investment cycle, whether it is related to the production of industrial investment, or financial investment related to market conditions, investment projects always seem to be a sure thing. Ten thousand acres of large afforestation program as if never affected by climate, environment, geographic factors, Bernie Madoff hedge fund on Wall Street can also be in two decades in several financial crisis, these investment projects are always presented in violation of the investment cycle of the anti-law characteristics.
The pyramid of investor structure
In order to pay the high returns to the first investors, the "Ponzi scheme" must continue to develop the downline, through lure, persuasion, affinity and connections to attract more and more investors to participate in the formation of the "pyramid" type of investor structure. The "pyramid" type of investor structure. A small number of informed people at the tip of the tower make profits by squeezing a large number of participants at the bottom of the tower and in the middle of the tower. Even the inscrutable Bernie Madoff, former Chairman of the Board of Directors of NASDAQ, was not immune to the mundane practice of soliciting a downline, utilizing a large number of friends, family members, and business associates to develop a "downline", with some obtaining commissions due to the success of the "attraction of capital", which is a "downline". The "downline" and the development of new "downline", snowballed into a "pyramid" structure.
Investing with caution
So back to the MLM scam, how did it get so many investors to fall for it in a short period of time?
1.to "high rebate, high yield" to attract members to invest in the Haikou Municipal Public Security Bureau of the economic investigation detachment of the deputy detachment of the Ren Jian introduction, across the Asia-European company promises that investors to buy the "Asia-European Coin", will enjoy a high rebate profits. For example, members of the investment of 10,000 yuan, to rise 0.05 yuan, for example, 250 days after the thawing out of the completion, with interest can reach 2.25 million yuan, a net profit of 1.25 million yuan.
2. Under the banner of state-owned enterprises and industry experts Haikou police reported that the trans-Asia-European company claimed to have a state-owned background, the creation of the investment platform is highly reliable; the suspect, Liu Mou, even claimed to be an expert in the field of China's virtual digital currencies. Police investigation found that these "high" labeling are actually suspects fabricated. They also have a "black history" of illegal network marketing in other provinces.
3. To investors "brainwashing" It is understood that the trans-Asia-European company in many cities in the country's luxury hotels held promotional meetings and forums to investors "brainwashing". Agents at all levels also through the formation of WeChat group, publicizing its beautiful vision, so that many individual investors to participate in the purchase of "Asia-Europe Coin".
The development of pyramid schemes today, many people will sigh "too many crooks, not enough brains". In fact, the essence of being cheated is because the fraudsters have seized the weakness of human nature, and successfully utilized the greed of some people, good and bad, get rich overnight, and so on, these quick success of the mode of thinking. Similarly, to do investment to be practical, do not always try to a million dollars, or even no profit, there is no lunch falling from the sky.