Five executives from a Filecoin mining service are facing a lawsuit at the People’s Court of Pingan County in China, over allegations that they pilfered millions of dollars and left investors in ruin.
On Aug. 14, local media reported that the court held a public hearing on a case that could potentially set a precedent in China for how crypto schemes are prosecuted and regulated. The case accuses executives from Shenzhen Space-Time Cloud Technology of setting up a pyramid scheme that amassed around $100 million and scammed their investors.
According to the report, defendants Lai Mouhang and Lai Moujun created the company in 2018. They hired other executives in the following years and expanded the company’s operations to promote investment opportunities connected with Filecoin’s rewards system and business model.
Prosecutors alleged that the defendants provided exaggerated profit predictions to attract participants into investing in their joint Filecoin mining endeavor. The lawsuit alleges that the defendants sold storage servers and promised great returns in a pyramid structure.
The prosecutors are claiming that the company got a total of $100 million from more than 57,000 users. According to the prosecutors, the executives disrupted economic order by using deception to defraud participants.
Meanwhile, Chinese police have been facilitating a crackdown on crypto and deepfake artificial intelligence. On Aug. 10, Chinese authorities reported that there have been 79 cases of fraud involving deepfake AI, arresting a total of 515 individuals. At the same time, the authorities arrested 21 people who were suspected of being involved in a $54 million Tether (USDT) money laundering scheme.