Movie ‘All or Nothing Unveiling a Corner of the Iceberg of Virtual Currency Investment Fraud

Film Exposes Virtual Currency Investment Fraud in 'All or Nothing

In the recently released movie “All In”, the actors’ “sexy dealers dealing cards online” and “patting their necks and praying” have sparked discussions. This movie reveals the insider of the entire overseas online fraud industry. Riding on the popularity of “All In”, today let’s talk about the common scams behind virtual currency investments. From investors to victims, there is often only a small step.

The Manquant team has received a large number of consultations from victims of virtual currency-related scams. The reasons for being scammed are varied, but after dealing with them for a while, we found that the tricks used by scammers are actually quite common. It’s the same old story with a different name, changing the soup but not the medicine.

01 The Road to Being Scammed by Hua Ying Hui

Hua Ying Hui has been investigated by the police in many places. For example, in July of this year, the Yushui Branch of the Xinyu Public Security Bureau issued a notice about the registration of investment losses in the Xinyu area of Hua Ying Hui investment platform, which mentioned that they are investigating the Hua Ying Hui investment platform fraud case in the Xinyu area. The notice by the Linquan County Public Security Bureau mentioned that they are investigating the case of Cheng Mou, Wang Mouhong, Zhang Mouzhen suspected of organizing and leading pyramid schemes, and some participants have not reported to the public security organs. In order to clarify all the criminal facts, accurately crack down on crimes, and safeguard the vital interests of the people, in accordance with relevant laws and regulations, the notice allows victims to register.

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Most of the victims who consulted the Manquant team about Hua Ying Hui are middle-aged people, with a few young people who asked on behalf of their family members. These victims not only do not understand blockchain technology, but also have no clear understanding of what virtual currency is.

When asked how they learned about Hua Ying Hui, most of them said it was through friends’ introductions, attending offline meetings, and listening to teachers’ lectures. As long as they attended, they would receive gifts such as USB drives and notebooks, and better gifts if they registered an account. There would also be lucky draws on site, “several people won cars”. When asked why they invested so much money, they mostly said that after trying the waters in the early stages and quickly gaining profits, under the brainwashing of lecturers and group members day after day, they invested more and more in order to take advantage of the platform’s recharge activities that offered large benefits.

Among these investors, there are still a group of “stubborn” ones: although the current withdrawal amount is very small in some regions, it is still possible to withdraw normally. They think it is just a temporary issue and are just a bit worried because they have seen too much online rumors recently, so they consult lawyers. When we tell them that they are very likely to be scammed and should report the case as soon as possible, they still say, “My friends around me are still doing it and they say it’s fine.”

Therefore, the Manquant team would like to remind everyone that the trick of Hua Ying Hui is actually to lure new members, make them invest, and maintain a false prosperity of the scam project. They achieve the purpose of illegally obtaining benefits through packaging such as “blockchain” and “digital quantification industry”. If you have participated in the Hua Ying Hui project, please report the case to the local police as soon as possible and provide corresponding remittance documents, chat records, and other evidence for the police to investigate and handle the case.

02 Virtual Currency “Ponzi Scheme”

As virtual currencies become more popular, criminals are following the trend. When the “tea leaf Ponzi scheme” didn’t work, they started playing with the new concept of virtual currency.

According to a judgment publicly released by Hong’an County, Hubei Province in June this year (Case No .: (2023) E1122 Criminal Initial 88), this criminal gang set up a false investment and financial management platform. They used overseas social networking and messaging software to impersonate unmarried young women from India, Singapore, and other places, and selectively targeted Indian men (why specifically target Indians) for romantic relationships.

After gaining the trust of the victims, they recommended gold investment products and enticed them to purchase and transfer rechargeable currency (Indian rupees) to a fake trading platform. Once the victims entered the platform, the currency had actually been transferred to the virtual currency wallet address controlled by the criminal gang through intermediaries. Finally, they manipulated the platform and claimed losses, taking possession of the currency that the victims had recharged.

03 Virtual Currency Fraud Gang

Similar to the “All In” documentary about the Myanmar industry chain, there was also a virtual currency fraud gang in China that had a large number of members, strict organizational discipline, and clear division of labor. In just 9 months, this gang defrauded large amounts of money from victims, with confirmed amounts of over 6 million RMB according to the police.

This criminal gang had a tightly-knit and comprehensive fraud scheme, strictly following the four steps of “finding targets, establishing trust, inducing investment, and defrauding property”. Members at different levels received commissions based on the amount of net inflow.

1. Finding Targets

Using multiple mobile phones for registration and packaging WeChat accounts, they disguised their WeChat accounts as false identities of investors with certain economic strength, and regularly sent materials to their circle of friends to maintain the authenticity of the WeChat accounts.

Through the criminal gang’s own designed online system, they searched for clients with economic strength and interest in stock investment, added them as WeChat friends, and then used templated scripts to chat with the victims, cultivating emotions to gain their initial trust.

2. Establishing Trust

Once trust was established, they would invite the victims to join WeChat groups for stock discussions. Each victim had a unique ID and an independent WeChat group.

In the WeChat groups, members of the criminal gang would pretend to be “instructors,” “assistant instructors,” “account opening managers,” and investors, engaging in conversations and interactions.

The disguised lecturers are responsible for explaining, analyzing stocks, and guiding victims to invest in stocks. The disguised assistants are mainly responsible for inviting people to join the group, chatting with clients, and sending information about the lecturer’s live broadcast room. The disguised investors are mainly responsible for cooperating with the lecturer and assistant, creating an atmosphere, and praising the lecturer. They use scripted templates to build relationships with victims.

For victims who are interested in investing, they are invited to the live broadcast room, where the lecturer further guides them to buy and sell stocks, maintains stickiness, and builds deep trust in the lecturer. 3. Inducing Investment

After about a month of lectures in the live broadcast room, team members use WeChat accounts to cooperate with each other in the live broadcast room, forwarding scripted messages, giving likes, and sending flowers to praise the lecturer, making the victims trust the lecturer even more. The lecturer timely introduces virtual currency products and promotes the value and appreciation potential of virtual currencies, claiming that they can lead investors to achieve wealth explosion.

For victims who are interested in purchasing virtual currencies, the account manager sends the platform link and invitation code of the virtual currency and guides clients to download, register, subscribe, deposit, and purchase virtual currencies. The client’s funds enter the personal account controlled by the platform.

4. Deceiving Property

After the victims deposit money, the virtual currency will continuously rise in the initial stage and can be withdrawn, allowing the victims to make some profits. However, the lecturer in the live broadcast room will claim that the virtual currency will continue to rise for reasons such as international roadshows. At the same time, the assistant will invite the victims to different levels of WeChat groups based on their investment amount, encouraging them to increase their investments.

When the victims’ investment reaches a certain target, the criminal group will manipulate the virtual currency to plummet, causing the clients to suffer losses, thus achieving the goal of deceiving the victims of their property.

In this way, after one round of “harvesting” virtual currency products, the criminal group will change their WeChat nicknames, live broadcast room names, lecturer aliases, virtual currency names, and affiliated platforms to carry out the next round of scamming activities. Round after round, the cycle continues endlessly.

04 Summary

China adopts a conservative attitude towards the trading of virtual currencies. The “Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation” issued in 2021 clearly states that virtual currencies do not have the same legal status as legal tender; virtual currency-related business activities are considered illegal financial activities; losses caused by investing in virtual currencies and related derivatives are borne by the individuals themselves.

However, China’s crackdown on virtual currency-related criminal offenses is by no means lenient. By searching for virtual currency as a keyword on the China Judgments Online website, you can see that in the past two years, there have been criminal judgments on virtual currency-related cases across the country.

Therefore, when investing in blockchain projects, it is necessary to first understand the project’s issuance method, trading method, market trends, price fluctuations, and other mechanisms. One should not be tempted by small profits and blindly enter the market. If encountering similar virtual currency scams as mentioned above, one should collect evidence as soon as possible, sort out key evidence materials, and assist the police in order to reduce the pressure of investigation and provide investigative efficiency.

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