CloudToken, another Chinese crypto Ponzi scheme, has ended in the same way as the now infamous PlusToken and has been taken down by police. Officers in Taiyuan, the biggest city in China’s northern Shanxi region, recently took down the scam and arrested 72 people in the process, following complaints from some of the more than 300 investors.
Over 300 Victims
Launched in January, CloudToken utilized a multi-level pay structure to compensate its shareholders, with bonuses paid out once certain signup levels were hit. CloudToken made the usual claims of guaranteed returns, promising a 10%-15% return on investment if investors kept at least $500 worth of the token at all times. The scheme is thought to have defrauded more than 300 victims out of an estimated 30 million yuan (over $4 million) during its year of operation.
Rewards for Holding Coins…or Not
One victim told news site 8BTC that they lost $20,000 through CloudToken, explaining that operators claimed that it was a decentralized wallet that would reward its users simply for holding coins, with rewards ranging between 6% and 10% of the invested amount. However, withdrawals reportedly ceased around November, at which time the individuals promising all these rewards promptly disappeared, leaving over 800,000 members financially stranded and unsure of how and when they would get their investments back.
Africa and Asia Becoming Bigger Targets for Scammer
CloudToken originated in China, but was heavily promoted throughout Asian countries including Korea, Japan and Malaysia, and also some countries in Africa, where the OneCoin scam also profited hugely. Scams promoting guaranteed returns have begun targeting poorer people in the likes of Asia and Africa, playing off the promise of being lifted out of poverty to rake in the cash from unsuspecting, and often desperate, individuals.