cryptocurrency pyramid scheme investigation

Key Points:* China investigates cryptocurrency projects for suspected pyramid schemes.

• No comments from project leadership found.
• No immediate global DeFi market impact observed. The Market Supervision Administration of Shiyan City, Hubei Province, has issued a risk warning and launched an investigation into crypto projects “Youke Chuang,” “Shiyi Hui,” and “Ronghui Capital.”

These projects allegedly use overseas platforms and pyramid referral models, violating China’s prohibition on virtual currency trading, prompting regulatory scrutiny and investor caution.

Shiyan City Probes High-Return Crypto Projects

The Shiyan City authorities issued a risk warning as they probed projects “Youke Chuang,” “Shiyi Hui,” and “Ronghui Capital.” Officials allege these projects incentivized membership growth and promised high returns through referral models that mimic pyramid schemes. Regulatory bodies stress such activities are illegal under China’s stringent crypto-trading regulations.

These developments serve as a reminder to the public that participation in these projects does not guarantee the safety of funds. As the Shiyan City Market Supervision Administration, China, stated, “Participation in such projects cannot guarantee the safety of your funds. All forms of intermediary services for trading virtual currencies are strictly prohibited under Chinese law.” In the past, similar warnings have temporarily halted illegal operations without bringing broader market impacts.

Governmental reactions include reminders of China’s ban on crypto-trading intermediary services. Legal bulletins warn of fund insecurity linked to these projects. Despite ongoing investigations, there have been no public statements from the projects’ leadership.

China’s Regulatory Crackdown Continues Unabated in 2023

Did you know? Chinese authorities have reinforced their crackdown on virtual currency schemes, with over 1,200 arrests in 2022 for illegal trading activities, significantly curbing regional crypto operations.

According to CoinMarketCap, Bitcoin (BTC) is currently priced at $116,649.09, with a market cap reaching $2.32 trillion. While experiencing a 5.23% rise over the past 24 hours, its 24-hour trading volume saw a minor decrease of 5.34%.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 01:36 UTC on August 10, 2025. Source: CoinMarketCap The Coincu research team anticipates further regulatory actions in China, potentially restricting unauthorized crypto operations while ensuring legal practices. However, expert insights suggest these local crackdowns are unlikely to disrupt global cryptocurrency markets significantly, focusing mainly on addressing domestic compliance issues. As highlighted by the EU Institute for Security Studies, “The Chinese authorities are likely to step up surveillance of bitcoin and the cryptocurrency market as a whole in the coming years.”

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