Babbitt Column | Case Study: Free Sugar Spreading Gives Miners, Also a Crime?

Editor's Note: The original title was "Case | Free Sugar Spreading and Mining Machines, also constituted a crime?" !

With the promotion of "new infrastructure" by the state, the practice of using financial technology and digital finance to organize and lead MLM activities has been on the rise. During the period, some participants thought that as long as they freely "sprinkle sugar" and "white to the mining machine", they would not commit crimes without collecting money. This idea is naive. Today we will help you with a classic mining machine case. Literacy.

Basic case

In 2016, people in the circle who had a good understanding of the virtual currency field, such as Zhang Mou, decided to start a self-funded "Xing Xing coin". During the initial period , miners were attracted to join by giving away mining machines and coins. The mining machine donated by the platform does not need to pay any fees other than registration, and it is completely free.

In addition to mining by mining machines, old miners can also publish a link to a certain star through social platforms such as WeChat Group to attract others to register; after others register through the link registration, the old miners can get a star from the offline mining from these new miners. Reward bonus for coins.

New miners who are pushed to join can also get free mining machines and tokens; and attract others to register through the token link, and get a commission reward based on a certain star coin obtained from offline mining.

Although the “coins” obtained from mining can also be traded and cashed out , the relevant income can only be withdrawn if the mining machine and tokens are actually purchased offline.

Referee result

Refer to (2017) Yue 5202 Xingchu No. 397 judgment for the referee result.

The court ruled that the participants in this case were sentenced to fixed-term imprisonment and the amounts of fines varied. The core member Zhang Mou was sentenced to the highest sentence and was eventually sentenced to:

Imprisonment for eight years and a fine of 2 million yuan.

The remaining participants were sentenced to two years to six years and eight months; and fines ranging from 10,000 to 300,000 yuan.

Judgment points

In this case, the mining machine is completely free; the tokens mined by the mining machine can also be completely free. The completely free behavior is in line with the "four characteristics" of MLM crimes, and mainly investigates whether it is possible to obtain property benefits behind the gifts of mining machines, tokens and other items.

(1) The eligibility for entry and the entry fee are not only based on whether certain funds must be paid when joining; they also investigate whether other funds need to be paid or disguised after joining for free .

(2) Hierarchy

Pass the review of the actual profit standard; if there is a layer of interest , it may be regarded as a level of MLM.

(3) Alluring

Only consider whether it is possible to make a profit; the statement that there are risks and possible losses does not prevent the establishment of the lure.

(4) Group compensation

Take the property benefit as the standard; even if the reward is given free of charge, it can still be used as the basis for judging the remuneration.

Controversial focus

First, is it necessary to pay the entrance fee before registration. Payment of entry fees refers to the payment of membership fees and entry fees to organizations in order to obtain certain qualifications and status. In this case, registration and entry are completely free, only the fee is collected during the withdrawal process and the team is remunerated, and the remuneration is calculated by charging others' fees; it can still meet the requirements for the establishment of MLM behavior .

Second, whether the free gift of mining machines belongs to property interests.

Free tokens and mining machines can be freely traded and cashed, and can be regarded as property interests. Therefore, the behavior of giving coins and giving out sugar can be regarded as a rewarding and enticing behavior. Only when the candy cannot be fulfilled at all, but only when it is the "play house" in the system, can the sugar behavior not be recognized as a property benefit.

Short conclusion

Free miners and coin distribution may also constitute a crime. As long as there is an act of remuneration for the investment team in the line below, the crime of organizing and leading a pyramid scheme under Article 224 of the Criminal Law can be established.