On October 27, 2020, my mother called me in the middle of the night and asked me in panic, "Will your Aunt Liu go to jail?"
I listened to her story with a confused look on my face, and then I realized that this was a Ponzi scheme of "cryptocurrency circle + pyramid scheme". Aunt Liu was her good friend who entered the game earlier than her and persuaded her to join. My mother was defrauded of 40,000 yuan, and Aunt Liu lost even more. On October 17, the virtual currency exchange MARK was suddenly shut down, and the announcement of a "national investigation" made them panic. They thought they had broken the law.
I kept comforting her and blaming myself for finding out about such a big thing only now. I told her that it was most likely that they were being exploited by the cryptocurrency circle and that it would not be illegal. I thought this was the norm in the cryptocurrency circle for retail investors to be exploited, but as I investigated further, I could never have imagined that this would be a pyramid scheme that could involve 180 billion yuan (according to statistics from the victims, there are currently too many victims and the authorities cannot fully integrate them) and defraud millions of people.
[Entry]
On the morning of October 28, I called Aunt Liu seven or eight times, but none of them went through. Near noon, I finally got through, but there were horrible noises of smashing and arguing on the other end of the line, mixed with bursts of sobbing.
After a long while, there was finally a response from the other end. It was Aunt Liu's tired voice. It turned out that the person she had introduced to the game was causing trouble and asking her to pay back the money. She was sick, had a mortgage, was nearly fifty years old, and had 70,000 yuan in cash taken away. Of course, she had no money to pay back. She explained over and over again, but the other party would not listen and just kept asking her to pay back the money. She had no money to pay back, so the scene in the initial phone call happened.
"They were smashing doors and furniture, and almost broke my cabinet to pieces. They threatened me that if I didn't pay them back, they would smash my house. This has been going on for several days."
I could hear Aunt Liu's fatigue and sadness from her voice. After comforting her and asking her questions for a long time, I finally understood the whole story.
At the end of March 2020, when the epidemic was raging, Aunt Liu and her family were unemployed at home. The closed small house and no money coming in meant they had to spend their savings all day long, which made the family's emotions extremely depressed.
In early April, a WeChat message from Huili, a friend she hadn’t contacted for many years, brought a ripple to her stagnant life. She thought it was a reunion between two good friends, but after chatting for a few minutes, she found out that the other party wanted to get her to do virtual currency. The other party solemnly assured her that her funds would be safe and that she would have stable returns. However, she was cautious and chose to politely refuse, saying, “I’ll think about it again.”
But it was precisely this subtle rejection that gave the other party hope to pursue her relentlessly. The other party called her as if he had found a life-saving straw and told her about the benefits of "position management" of their virtual currency project.
The essence of the so-called position management, in simple terms, is to trade virtual currencies in some virtual currency exchanges. However, they are not speculating on currencies, but are doing the work of maintaining virtual currencies. By constantly buying and selling and amplifying various data such as trading volume, the overall data will show a wave-like upward trend, thereby attracting retail investors to join in.
When enough retail investors enter the market, they organize selling at high prices, causing the digital currency to fall. At this time, the retail investors' mentality of "buy high and not buy low" takes effect, and they take advantage of the decline to sell. They then organize buying when the price is low, and continue to organize buying and selling to promote the appreciation of the currency. They repeat the above operations at the appropriate peak to continuously reap the profits from retail investors.
Huili told her bluntly: "Just understand that we are just cutting leeks, retail investors are speculating in cryptocurrencies, and we are doing an orderly job. We take on some of the work of maintaining virtual currencies by issuers, and then use organized buying and selling to continuously cut leeks."
At this time, the jubilant Huili did not know that they were the leeks that were about to be harvested.
At the same time, Huili assured her that the funds were safe, and kept listing the following reasons:
① Funds are absolutely safe: You control the principal yourself, and you don’t need to pay working capital to anyone. Just like buying stocks, you register an account at the exchange, put the money in your own account, and buy and sell according to the instructions of the issuer.
② The exchange will not go bankrupt: All our members will be charged a handling fee of 3‰ for both buying and selling, and can collect 100-200 million in handling fees per month. Therefore, an exchange with sustained high returns will not go bankrupt.
③ The coin issuer will not run away: Digital currency is like stocks. Even if the coin issuer makes adjustments to the market, what is obtained is digital currency, and the cash out must go through the exchange. A large amount of cash out is directly monitored by the exchange and needs to undergo very strict review before it can be passed.
④The exchange is safer as the guarantor of our community. Our community conducts high-frequency transactions in each round, and the monthly transaction fees generated have exceeded 60 million. We are not only a partner of the exchange, but also a super customer of the exchange. The exchange can only guarantee its own interests by guaranteeing the interests of major customers!
Huili was prepared for a rainy day. Before Aunt Liu could doubt her, she continued:
① We are not a pyramid scheme: once you take out money in a pyramid scheme, you can never get it back. Our positions are in our own accounts, and we can enter and exit at will.
② We are not illegally raising funds: Our own positions are in our own electronic wallets and are controlled by ourselves. They are not transferred to a certain account.
③ We will never break the law: my country has not yet issued relevant laws and regulations on digital currency. We can do anything that is not prohibited by law! Any job nature must first form a job and then form an industry before there are laws and regulations to regulate the industry. We are our own positions, and every selling and buying transaction is real. We earn the difference in the transaction, which is our labor fee.
Even Huili gave a direct response to the negative news on the Internet: People are afraid of being famous, just like pigs are afraid of being fat. Some people maliciously slander, such as those who retaliate maliciously after losses from private operations.
At the same time, Huili also told her that she had already harvested four batches of leeks, and boasted to Aunt Liu about her monthly income of about 50,000 yuan.
Huili always keeps the term "cutting leeks" on her lips.
Even with such detailed and seemingly convincing reasons, Aunt Liu was still skeptical. The minimum entry point is 20,000, which may not be a big deal for many people, but for her, it is almost her entire family fortune.
The initial hesitation was eventually shattered by the sudden stomach pain. The hospital examination results showed severe gastric erosion, which might develop into gastric perforation. Aunt Liu, who was nearly 50 years old, unemployed due to the epidemic, and still struggling to pay off her mortgage, was finally defeated. She took the initiative to find Huili and chose to join the game.
It was indeed as Huili said, with a capital of 20,000, she could easily earn two to three thousand every month, but at that time she had not thought that she would be swallowed up by the so-called "virtual currency maintenance" and almost beyond redemption.
[Expansion]
Aunt Liu, who joined the game, soon tasted the sweetness. At the same time, her idea that "this project is very safe" became stronger as she continued to make money. However, her poor family situation and serious illness became catalysts, making her desire for money grow stronger.
There is a promotion mechanism within the position management team:
The overall levels from top to bottom are divided into: 10 founders, executive directors, directors, big group leaders, small group leaders, and ordinary members.
Ordinary members earn two to three thousand yuan per month, small group leaders earn 10,000 to 30,000 yuan per month, large group leaders earn 50,000 to 100,000 yuan per month, directors earn more than 300,000 yuan per month, and executive directors earn more than 600,000 yuan per month, with no upper limit.
The top 10 founders are the founders of position management, and now they have run away with the money. The list is as follows:
At the position management sharing session, their highest-earning executive director earned 1.07 million yuan a month, while Huili, who brought her into the group, earned about 50,000 yuan a month.
It is very easy to become a small group leader from an ordinary member. You only need to invite 10 people to join, and you will automatically become a small group leader. The small group leader can obtain 20% of the profits of his members. It is also very easy to become a big group leader. As long as you have more than 2 small group leaders, you will automatically become a big group leader. To become a director, you are required to have 4 big group leaders. To become a standing director, you are required to have 4 directors.
Aunt Liu was eager to try this, but she had no confidence that she could attract 10 people, so the idea was shelved for a month. However, in May, the senior position management said that they would organize a May Day event for a month. During this month, as long as 7 people were brought in, they would be automatically promoted to a small group leader. When the event ended in June, the number of people would automatically become 10.
Aunt Liu's last line of defense was broken, and she began to continuously recruit people to join the game. She called all her friends, but the entry rate was very low. Later, I explained to her that the low entry rate was exactly what the scammers were looking for:
The rhetoric of "making money without doing anything" and "making money by just moving your fingers" is a method to screen out people who are easily brainwashed. The purpose is to eliminate the groups that are not easily brainwashed as soon as possible, so as to avoid problems in the subsequent brainwashing work.
Not long after, Aunt Liu successfully brought one person in, but since the first person was brought in, this crazy mode of pulling people in was doomed to be unstoppable.
In addition to the promotion mechanism, the position management team has an additional mechanism. If a member A who starts to recruit people fails to reach more than 10 people within a month (7 people during the May event), he cannot become a small group leader. Moreover, if his subordinate B also starts to recruit people and successfully becomes a small group leader, then this new small group leader no longer belongs to A, and A will no longer enjoy the profits obtained by B.
This means that Aunt Liu not only needs to race against time of one month, but also against the new team members. When the first member starts to join, the sunk cost starts to soar, and the brakes gradually fail.
She started to bring more and more people into the game, including my mother.
My mom and Aunt Liu have been good friends since childhood. My mom is a typical woman who is poor but very loyal. When Aunt Liu found her, she had already recruited 6 people. According to Aunt Liu, "At first, I didn't want to recruit your mom, but I was just one person short and couldn't find the next one, so I had to ask your mom for help. Now I really regret it."
My mother's silent entry led to Aunt Liu's successful becoming the leader of a small group. When she earned 10,000 yuan in the first month, joy and pride exploded in Aunt Liu's heart and gradually began to devour her rationality.
In September, Aunt Liu went to Hefei to participate in position management talent training. Full of anticipation, as if she was about to usher in the second spring of her life, she boarded the train and entered the venue.
At the conference, she met a managing director who earned 1.07 million yuan a month, and also met a founder who earned over 100 million yuan a year.
A standing director came on stage and made a shocking statement, saying that he would use his life to ensure the safety of everyone’s funds!
(The video part cannot be published, you can go to the official account to watch it)
There was also a disabled person who came on stage to share his experience. Several people in the audience were moved to tears and cheered for the position management team to "serve the country and the people."
Even the top ten founders donated a Hope Primary School, which moved countless members.
On the stage, the founders and directors kept shouting assurances, promising everyone a bright and prosperous future.
At the meeting, the founder also liked to tell the story of Jack Ma and the cleaning lady. The version is as follows:
In order to borrow money to run the company, Jack Ma rode his bicycle around looking for investors, but no one believed him.
As a result, one day he pulled Aunt Wang, who was sweeping the floor, aside to chat and talk about life. While chatting, he began to introduce Alibaba to Aunt Wang. Jack Ma told Aunt Wang that if she invested in the company and bought 1,000 yuan of Alibaba shares, she would not have to sweep the floor in the future; if she bought 3,000 to 5,000 yuan, she could buy a house and a car in the future; if she bought 10,000 yuan, she would earn 100 million yuan in the future!
The innocent and kind Aunt Wang was moved by the cute Ma Yun, and she immediately went home, took out her passbook and gave it to Ma Yun.
When Ma Yun saw it, he almost fainted with happiness and kept thanking the cleaning lady.
Unexpectedly, she realized a few years later that she should be the one to say thank you!
By 2008, the 10,000 yuan had generated a return of 2.6 billion yuan.
By 2018, this 10,000 had turned into a return of 31.8 billion!
This story was used by many people in the speculative circle to brainwash others, and another group of people made up another version of this story:
Many years later, Aunt Wang, who saw Alibaba become a giant, said:
Jack Ma asked me to invest some money, and I wanted to try 10,000 yuan, but several friends persuaded me not to. Later, when Alibaba went public, a colleague who had invested money called me and said, "I told you to do it or not, that 10,000 yuan is now worth 31.8 billion yuan!"
The song usually ends with a chant:
That's fate.
If you catch it, you have it.
Even if you don’t catch it, it will be a lifetime!
During the three-day training, there was actually no substantive content. It was all about emphasizing over and over again the importance of the team, how safe the funds are, and how bright the future is.
But the real-life stories of "earning hundreds of thousands or millions" amplified the emotions of everyone in the venue to the extreme.
At the end of the training, all participants were full of energy and determined to continue recruiting people and move towards a monthly income of one million.
The same was true for Aunt Liu who was boarding the train back home.
In addition, even without the "brainwashing propaganda" of the meeting, after becoming the leader of a small group, she is still subject to a monthly new task constraint of 35% of the team members. If she fails to achieve this, she will be fined or even directly kicked out. This means that Aunt Liu must continue to recruit people to join the group without stopping.
The rules and the amplified desires together stimulated Aunt Liu's nerves, causing her to continue to swell and even become obsessed.
Now that she realized she had been cheated, she looked back and realized that the game had become unstoppable ever since she had brought the first person into the game.
[Harvest]
"Cutting leeks" is a phrase that Huili, who brought Aunt Liu into the game, often says. One month after joining the game, Aunt Liu also started using this "fashionable" term. This term gave her the illusion of being "superior to others".
It does seem to be the case. The internal operating mechanism of position management is to maintain a newly issued virtual currency on a virtual currency trading platform, continuously buy and sell it to increase exposure, attract retail investors to join, and organize buying and selling to reap the profits from retail investors.
These virtual currencies and exchanges are all issued abroad because virtual currencies are not recognized in China.
Around 2015, the People’s Bank of China and five other ministries and commissions jointly issued the “Notice on Preventing Bitcoin Risks”:
Financial institutions are prohibited from getting involved in Bitcoin, but at the same time, it is believed that: "Bitcoin is a specific virtual commodity that does not have the same legal status as currency and cannot and should not be circulated and used as currency in the market. However, as a commodity trading behavior on the Internet, ordinary people have the freedom to participate in Bitcoin transactions at their own risk."
On October 13, 2015, the People’s Daily also expressed similar regulatory views in “Electronic Currency Regulation on the Agenda”:
“Although many virtual currencies are not close to the real currency attributes, they are still relatively stable in their development path. By exploring the currency functions centered on payment and settlement, they are helpful in exploring real electronic currency innovation. However, innovation must be followed by supervision.”
Since then, there have been many regulations regarding virtual currency, but basically all of them do not recognize virtual currency and prohibit domestic institutions from engaging in virtual currency transactions.
The virtual currencies issued now are basically evolved from Bitcoin. Bitcoin is one of the earliest virtual currencies and is based on blockchain. Due to its various characteristics such as "anonymity", "decentralization", and "extremely low transaction costs", it is very popular, especially among various black industries such as black industries and money laundering.
Because when you use cash or bank transfer transactions, the bank can check the flow of your funds and trace you, but because of the anonymity and decentralization of Bitcoin, as long as the money flows into it, basically no one can check it, making it a currency that criminals love very much.
The volume of Bitcoin transactions continues to increase, but the number of Bitcoins is limited, with only 21 million. The scarcity and high utilization rate make Bitcoin appreciate rapidly.
Because Bitcoin's algorithm is not difficult to copy, many speculators began to copy Bitcoin, and soon, a large number of virtual currencies based on Bitcoin appeared on the market.
Since then, various mechanisms surrounding virtual currencies have begun to grow wildly, and speculators see it as an opportunity to gain explosive wealth. This is indeed the case. Since the birth of Bitcoin, its value has increased tens of millions of times. Today, the value of one Bitcoin exceeds 100,000 RMB:
As of February 2018, Ethereum, a virtual currency copied from Bitcoin, has successfully become the virtual currency with the second largest market value after Bitcoin:
The skyrocketing value attracted more and more speculators to enter the market, virtual currencies flourished, and major virtual currency exchanges also sprang up everywhere, forming a "cryptocurrency speculation market" similar to the stock market.
The top 10 exchanges by trading volume today are as follows. Huobi, which has the largest trading volume, has also received investments from shareholders of many world-renowned companies such as Apple and Alibaba.
However, due to the lack of regulatory mechanisms, the emerging high-profit industry is destined to be linked to various dirty things such as black production, scams, money laundering, etc. Even the major exchanges with extremely high status today probably dare not say that their foundation is really clean. A few days ago, there were news that the finances of the two major exchanges, Huobi and OKCoin, were investigated and senior executives were taken away.
What Aunt Liu does in position management is to use Huobi.com as a springboard and keep reaping the benefits.
The way they maintain the currency is to first exchange RMB into USDT on Huobi.com. USDT is the US legal tender, 1USDT=1$, and is a stable currency, similar to the status of the US dollar in the world. If you want to export foreign exchange, you must first exchange various currencies into US dollars before trading. The same is true for virtual currency. First exchange RMB (CCNY) into USDT, and then charge it into the virtual currency wallet you need.
The way to manage positions is to first exchange CCNY for USDT, and then exchange USDT for MKC coin of MARK exchange. According to the official statement of the position, MKC is also a stable currency like USDT, and its value remains unchanged. It is used as a medium for buying other currencies. After buying MKC, they will buy the currencies that need to be maintained. On the MARK platform, the currency they maintain is TSN.
The buying and selling process of position management is also very mysterious. The ten founders will issue operation instructions in a software called sugarm. They organize members to buy and sell at the same time. No one can speak on this software on weekdays. After the trading order is issued, it will be cleared and locked the next day without any trace.
In this series of mysterious operations, Aunt Liu followed the position team to launch waves of harvesting. Because it was prohibited in China, there was a strong sense of patriotism in the position management team: "We are harvesting foreigners and making money from foreigners."
In the process of continuous harvesting, Aunt Liu experienced a very extreme harvest. One day after they sold on a large scale, the maintained virtual currency dropped directly from more than 3 points to 0.000001 in an instant. According to Aunt Liu, the money of all retail investors suddenly changed from tens of thousands to infinitely close to 0, which meant the end of the entire harvesting process.
But Aunt Liu would never have imagined that from the beginning to the end, there were no foreigners for them to reap the benefits. The so-called 3 points becoming 0.000001 was just a number game controlled by the top 10 founders.
[Exposure]
In October, Aunt Liu's team had grown to 16 people. In order to achieve the monthly growth target of 35%, she called almost everyone she knew. Even so, she still failed to meet the standard once. At that time, she was anxious and asked Huili for help. Huili told her:
"Don't you know? Small group owners can increase their positions. Ordinary members can increase their positions up to 30,000, but small group owners can increase their positions up to 50,000. If you increase your positions up to 50,000, it will also count as one quota."
In order to achieve her goal, she gritted her teeth and invested all the money she had earned before. However, she was still short of one person, so she found my mother again and persuaded her to open a new account with someone else's ID card so that she could earn more every month. After Aunt Liu's persistence, my mother invested another 20,000 yuan. Aunt Liu achieved her goal for October, and her tragedy began to show.
On October 11, MARK Exchange suddenly announced the suspension of trading, saying it would undergo national inspection. The grassroots members were uneasy, but Aunt Liu’s superiors kept comforting them, assuring them that there was no problem and everyone’s funds were fine. It was not until October 20th that Aunt Liu logged into the MARK Exchange again and found that her digital wallet was empty.
"I've been cheated, it's over." Aunt Liu's head was buzzing, and she began to frantically look for Huili for help. Huili said she knew nothing about it. Huili then asked her superior Wu Xia for help, but Wu Xia also knew nothing about it. Wu Xia asked her superior for help, but she still knew nothing about it.
The unrest began to spread among the members. The team in Suzhou began to report the case. Xi'an, Henan, Tongxian and Xiamen, where the largest team was located, all began to report the case one after another. It was not until this time that Aunt Liu knew that this team involved so many people, spread across the country, including millions of people. The amount of money involved varied, but it was at least 7 billion yuan. There were even senior position management executives who said that 180 billion yuan was involved, making it the largest virtual currency scam in Asia to date.
And everyone, starting from the executive directors, was totally unaware of the situation. The top 10 founders absconded with the money without a word, and all the remaining people were deceived.
Around November 1, Aunt Liu was slumped on the sofa all day, she didn't know what to do. The people she had brought in started to urge her to pay back the money, and even came to her house and wanted to smash all the things in the house, which made her restless.
To make matters worse, news of her worsening gastric erosion also came. She was almost completely devastated until November 10, when, at my advice, she went to the police station to report the case. The police classified it as a pyramid scheme, because pyramid schemes are a third-level crime and people below the third level are usually considered victims. Aunt Liu was finally able to put aside her worries about "jail," and concentrate on dealing with her subordinates who were coming to smash and destroy things.
Ever since Aunt Liu started telling me about her experience in early November, I have been searching for information, and the more I searched, the more frightened I became.
The founder said that their third-party exchange MARK, which maintains digital currency, is in a neutral position and is backed by both Singapore and the United States, is just a fake institution.
It was only established in April and May this year, and the 10 founders only promoted this platform on the cryptocurrency website in May. They called it a third party, but it was actually an exchange they created themselves. They said that the data on this exchange were all free trading curves, but in fact they could control all virtual wallets and all numbers:
The so-called MKC is not a so-called stable currency at all, but a simple virtual currency. Now the MKC currency has fallen to the floor: 0.
On the MARK platform, even the transaction data curve is drawn by the 10 founders and the MARK platform manager using computers:
They were making waves of transactions and carrying out the so-called "cutting of leeks" there, all just on an empty shell, "manually" operated by the 10 major founders, giving them the illusion that "they were cutting leeks themselves".
On this unknown fake exchange MARK platform, there will be very few retail investors participating. Retail investors are not stupid. There are so many big platforms but they have to go to this fake platform. There are no foreigners for them to reap. From the beginning to the end, they are just playing with themselves and reaping themselves.
The profits they can withdraw are only a tiny portion of their capital in the market and the capital of those who came in later. The so-called money-making task that makes them ecstatic is just to withdraw a portion of their capital every once in a while.
They keep saying "cutting leeks", but they don't know that they are the only leeks waiting to be harvested.
The whole game is not about the rise of a new industry in a new era, but a Ponzi scheme disguised as virtual currency and high technology.
The game is over. The top 10 founders have run away with the money and transferred their assets overseas. The police have begun to track them down, but the countless people involved are facing an extremely dark dawn.
[Tragic]
Since the incident was exposed, the entire position management team began to be exposed to the view of the participants. Everyone then discovered that almost all of them were mothers, poor middle-aged people who lost their jobs at home during the epidemic, or even elderly people with serious illnesses.
More and more of them are starting to join the game, not out of greed, but for the purpose of survival.
The epidemic has pushed countless people into desperate situations, but it has also given this position management team the magic water of explosive growth.
There are also many deaf-mute people who joined the game with them. The position management team also released a promotional video on Douyin, which teaches a deaf-mute how to trade virtual currency and participate in this so-called "benefiting the desperate" plan. There is a yellow slogan on the video: This is the hope of the blind and vulnerable groups!!!
After the truth was revealed, those who had everything taken away even began to set up yakuza and commit suicide.
In the rights protection circle, there are many stories of people who are desperate.
They are waiting for the police to investigate, but they also know that in cases like this, the principal will most likely not be recovered.
In poverty and illness, they began to accept the cruel reality that they were the real leeks.
[postscript]
When I wrote this article, I was in a heavy mood. At first, I thought they were all ridiculous leeks. It was already 2020, how could so many people still fall for this kind of scam.
But when I see the deaf, dumb, disabled, and sick elderly people, I can no longer laugh at them.
They joined the game because they were powerless, because they had no other choice, and in order to survive.
I can mock the inferiority of human nature, and I can mock the standing directors and directors who enter the game knowing nothing, but I cannot mock those who regard position management as a life-saving straw.
I can admire the swindlers’ cleverness, but I shouldn’t use the swindlers’ cleverness to mock the ignorant victims. Even Huili, who pulled Aunt Liu into the game, still knows nothing about the series of operations in the cryptocurrency circle.
It is not the victims who should be blamed and bear the wrath, but those 10 greedy vampires.
What is even more shocking is that hundreds of similar scams have broken out during the epidemic. There are now 186 registered Ponzi schemes that have absconded with the money, and countless people have been deceived.
If you don't fall for this, there will immediately be countless traps dug to lure you into them in various ways.
I spent more than ten days investigating and collecting information to write this article, not only to record, to speak for them, to seek justice for them, but also to tell everyone: Beware of the pervasive virtual currency scams.
Even if you already knew about this, please be sure to forward this article to your elders and friends, and let them be careful of scams with similar plots. Don't be like me, who waited until my mother invested 40,000 yuan and was defrauded of everything before I realized this happened.
In this respect, I am an unqualified son.
I condemn myself, but I also hope that no family will be dragged into an irretrievable predicament because of blood-sucking scammers.
I would like to use this article as a footnote to this huge scam.
I just hope everyone is safe.
The above is from fan submissions
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