Recently, actor Wang Xing went to Thailand to find a job and film a movie, but was deceived and taken to a fraud park in Myanmar, where his personal freedom was restricted. This has caused heated discussions on the Internet. Due to the increasing supervision of the Web3 industry in China, exchanges and project parties have also gone overseas in recent years. Southeast Asia has low prices, a time zone close to China, and some countries are more friendly to the supervision of cryptocurrencies, so it has become the first choice for Web3 companies to go overseas in recent years.
Traditional Internet people in China who want to work in Web3 have also chosen to submit their resumes to work in Southeast Asia. So, in addition to paying attention to personal safety, what criminal risks should traditional Internet people be careful of when working in Web3 overseas?
Case 1: A trading platform that uses virtual currency investment as a gimmick but actually takes advantage of customers
Case No.: (2024) Shan 01 Criminal Final No. 545
Case Introduction:
From May to September 2019, the defendant Liu and others formed a telecommunications network fraud criminal group in the Philippines and carried out fraud activities against citizens of mainland China. Fan and 71 others joined one after another. The fraud criminal group has a clear hierarchy and division of labor, strict management, and has several levels of general manager, director, group leader, and salesperson. At the same time, there are key members who are responsible for recruitment, training, logistics, personnel, and wages. The food, accommodation, funds, wages, and training of the members are all arranged and managed by the group.
Steps to carry out the fraud:
The first step is to "raise an account". The salesperson uses the mobile phone used in the crime to log in to the WeChat and QQ accounts, and avoid the account being banned by playing games, watching videos, and increasing the number of steps. At the same time, by posting to Moments and other methods, the WeChat and QQ accounts are disguised as false identities such as "stock teacher", "assistant", and "stockholder".
The second step is to "attract fans". The salesperson will pull the victim into WeChat and QQ groups, and use WeChat and QQ accounts disguised as "stock teachers" or "assistants" to send and explain stock knowledge in the group. Other salespersons use WeChat and QQ accounts disguised as "stock investors" to act as "water army" to further deceive the victim's trust.
The third step is "inducement", which is to trick victims into watching online live broadcast platforms, where "stock teachers" give live lectures and induce victims to invest in "virtual digital currency".
The fourth step is "killing the pig". When the victim has invested enough money, the fraud criminal group will modify the platform's K-line trend through back-end operations to create the illusion that the victim has lost money. The platform will then crash, making it impossible for the victim to log in to the platform and transfer the defrauded funds. This is commonly known as "killing the pig". Afterwards, the "water army" will be arranged to "comfort" the victim in the group, making the victim mistakenly believe that his investment has failed, thus reducing the rate of reporting to the police.
The defendant Fan confessed: At the end of May 2019, Li asked him to go to the Philippines to do blockchain and virtual currency business, so he asked Niu and others to go to Palawan, Philippines, and Li reimbursed the air tickets. After arriving at the hotel, the defendant Liu discussed the business with Fan and Li. When the first round was about to end, Fan knew that it was a "pig killing" scam. Later, Liu asked Fan to be the general manager in charge of the business, responsible for using false identities to introduce shareholders in WeChat and QQ stock groups into the live broadcast room, and the rest of the matter was handed over to the platform.
The defendant Li confessed: The fraud plan was to create a voting website, let the victims vote for the stock lecturer, and then let the victims listen to the lecturer talk about financial knowledge, such as Buffett, Bitcoin, etc., to deceive the victims into investing, thereby committing fraud.
In the end, the court determined that Liu and others had set up a telecommunications network fraud group overseas, organized and led many people to engage in fraud activities specifically targeting Chinese citizens, and defrauded others of 12.8754 million yuan, which was a particularly large amount. His behavior constituted the crime of fraud. He was sentenced to 12 years in prison and fined 500,000 yuan.
Lawyer's Comments:
Some countries and regions in Southeast Asia are not only the first choice for the Web3 industry to go overseas, but also hide many fraudulent trading platforms under the banner of virtual currency investment. Therefore, traditional Internet people who want to join the Web3 industry must open their eyes and carefully identify them. Generally, the recruitment information of such fraudulent trading platforms will be mixed in the Web3 recruitment group of Telegram. They will require that after passing the online interview, they will go directly to the offline office. The company will reimburse the air tickets and arrange accommodation in the park. Basically, it is a straight line between two points. Unlike some Web3 companies, they can work remotely in the early stage. The two sides will run in for a period of time, and the workers will understand the business model clearly. After passing the probation period, the company will require them to go overseas to work offline in order to avoid compliance risks.
In this case heard by the Xi'an Intermediate People's Court, the fraudulent trading platform used blockchain and virtual currency as a gimmick to recruit domestic technical and business personnel to work overseas. Platform users need to convert RMB into virtual currency in the early stage, which is the same as the deposit process of regular exchanges, and then invest in virtual currency under the guidance of the platform's "stock teacher". The technicians manually manipulated and modified the K-line in the background, which eventually led to losses for platform investors.
This behavior of eating up customers' losses is for the purpose of illegal possession. It fabricates investment facts to conceal the truth and manipulates the K-line trend of the trading platform to defraud investors of virtual currency, which constitutes the crime of fraud. The work content of the business personnel recruited from China is essentially to divert traffic for the fraudulent trading platform. The behavior of the technicians in the background to change the K-line is also an act of helping the fraudulent trading platform to defraud virtual currency.
The Web3 industry is developing and changing very quickly, and new business models often emerge. You must carefully identify them when applying for relevant positions. After joining the company, you must also learn more and communicate more about the company's business model and work content. Once you find any abnormalities, find a way to get out as soon as possible, stop the loss in time, and avoid criminal risks.
Case 2: A pyramid scheme that issued virtual currency to lure investors
Case No.: (2024) Yun 2623 Criminal First Instance No. 77
Case Introduction:
In February 2023, the defendant Li A and others discussed investing in a virtual currency project. After the parties reached an agreement, Li A was specifically responsible for contacting Li C, a technician from Sichuan XXXX Technology Co., Ltd., to develop the MMMWBANK (hereinafter referred to as the "3M" platform) project platform to issue the token USDT. The project model is to attract people to join the project by investing in virtual currency to make high profits. After the platform is built, investors will invest in the purchase of USDT tokens and trade with MAVR coins, and the platform will make a profit of 1% of the investor's transaction amount.
The platform income is divided into static income and dynamic income. The static income is that after the user invests 15U to activate the account, the user invests for the first time to purchase 50U-500U, and chooses three different periods of investment: 3 days, 7 days, and 15 days. The corresponding interest rates are 4%, 10%, and 22%. Each transaction needs to pay a 2% handling fee to the platform. After the investment period expires, only 70% of the principal and income can be withdrawn, and the remaining 30% is used as the principal pledge. In the next investment, only 70% of the principal needs to be invested, plus the 30% pledged last time, and the same 100% interest income can be enjoyed. Dynamic income users can withdraw the percentage income of the interest part of the investment developed by themselves. The number of direct referrals can get as many generations as the number of people, and the maximum profit can be nine generations.
On February 17, 2023, after the platform was completed and put into operation, Li A, as the top administrator of the 3M platform, was mainly responsible for the finance and technology of the platform, Hu was responsible for marketing and market management, Xiang was responsible for platform planning, Li B and Jiang were responsible for platform accounting and buying fans, and Li C was responsible for editing and copywriting of platform promotional materials. Hu, Jiang, Li B, and Li C registered to invest in the 3M platform according to the link sent by Li A, and then actively promoted the high return information of the investment platform, and carried out publicity and lectures offline, and developed Wan and others as direct pushers, and their direct pushers developed other downlines to invest in the 3M platform. It has been identified that there are 375 users with more than 3 downline levels (including 3 levels) and a cumulative number of more than 30 downlines (including 30).
In June 2023, the defendant Li Moubing privately changed the 3M platform data during the technical maintenance of the 3M platform data and stole 120,000 U coins from the platform. Later, some of the U coins were exchanged for RMB 618,623 at an exchange rate of 7.05 through the exchange. After the incident, the remaining U coins were exchanged for RMB 176,096 through the entrusted exchange. The defendant Li Moubing handed over the stolen RMB 794,719 to the account of the Xichou County Public Security Bureau.
In the end, the court found that the defendants Li A and others used the "3M" platform to issue virtual currency, lured investors to join the platform by offering high profits by investing in virtual currency, and formed hierarchies in a certain order, using the number of people they developed as compensation for profit. Their actions constituted the crime of organizing and leading pyramid schemes and were a joint crime; the defendant Li C, for the purpose of illegal possession, took advantage of the convenience of managing and maintaining the "3M" platform technology to secretly steal other people's property in an extremely large amount, and his actions constituted the crime of theft.
Lawyer's Comments:
The case heard by the Xichou County Court in Yunnan Province is a typical pyramid scheme that attracts investors with high returns and tiered rebates by issuing virtual currency. In this case, Li Moubing, a technician of a technology company, was responsible for developing the platform and issuing virtual currency for the project. During work, he also used his authority to modify data and stole USDT from the platform. Many Web3 projects will recruit some part-time remote technical developers or operators in the early stage. For some traditional Internet developers, they can use their spare time to undertake the development of Web3 projects, but at the same time, they must carefully identify whether the operation mode of the project is illegal.
In addition, some early Web3 startup teams have relatively chaotic management, and do not strictly control user asset security and platform risk control, which gives authorized developers an opportunity to take advantage of it. Therefore, developers must stick to the bottom line and not break the law and steal the platform's virtual assets.
Summary and Thoughts
Due to the economic downturn, the traditional Internet industry has suffered from severe internal competition and frequent layoffs. Compared with the traditional Internet, the Web3 industry has great growth potential and opportunities for remote work and even working abroad, so it is very attractive to traditional Internet people.
However, due to the decentralized technical characteristics of virtual currencies such as BTC and USDT, they are used by many criminal organizations as tools and media for criminal money laundering. Traditional Internet people must keep their eyes open when submitting resumes to find job opportunities in the Web3 industry, and stop immediately if they find any illegal or criminal behavior in the company's business or work content. Many Web3 projects are innovative in business, and the operation and promotion models are packaged layer by layer. If traditional Internet people find it difficult to distinguish the legal risks, they can seek advice and help from professional cryptocurrency lawyers.
