Law enforcement in China busted yet another cryptocurrency scam defrauding its residents, according to police.
Seventy-two people involved with CloudToken crypto scam were taken into custody in Taiyuan, the biggest city in northern China’s Shanxi region. The suspects were accused of defrauding more than 300 victims out of an estimated 30 million yuan (over $4 million).
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Similar to the infamous $3 billion PlusToken scam, CloudToken is another multi-level marketing scheme with high processing fees. Launched in January, CloudToken utilizes a 21-level pay structure to compensate its shareholders. Once the signups hit certain levels, the referrer receives bonus dividend payments. CloudToken promises a 10%-15% return on investment if an investor keeps at least $500 worth of the token at all times.
A victim who wished to remain anonymous told news site 8BTC that they lost $20,000 on CloudToken. The victim explained the crypto scam stole over $500 million from investors by claiming it was a decentralized wallet that would reward its users for maintaining coins. The payment was the company’s utility token, CloudToken claimed, and the rewards would be 6% to 10% of the invested amount.
The individuals promising all these rewards disappeared, leaving over 800,000 members unsure when and how they will get their initial investment back. Reports out of China suggest that withdrawals stopped starting around early November 2019.
The CloudToken project originated in China. It’s actively promoted throughout Asian countries such as Korea, Japan, Indonesia, Malaysia, and even some countries in Africa.
On the same day of the Taiyuan arrests, authorities in Baotou, the city of Inner Mongolia in northern China, warned the public of a similar Ponzi scam, Wotoken, when its investors announced that withdrawals had been halted and the Wotoken wallet app had halted service.
Some Chinese investors suspect that the same scammers are behind PlusToken, Wotoken, and other Pyramid schemes. Given the arrest of some key members of the PlusToken scam, while other major scams are still dumping their crypto, there is little hope for investors of such projects to get their money back.
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