Massive fire disrupts Chinese BTC mining operation

The BTC blockchain experienced some anomalies on September 30, and a massive disruption to a Chinese mining farm might have played a role. Early reports indicate an Innosilicon mining farm burst into flame, causing them to lose millions in hardware and possibly throwing the whole BTC network into disarray.

The fire was first reported on Twitter by user @OGTBC, and later picked up by Dovey Won who found a video of the fire:

As Wan notes, $10 million worth of hardware may have been lost in the blaze, which occurred at an undisclosed location in China. That would be a huge blow to the mining firm if true, as they had also announced the same day a delay to their next shipment of mining hardware to external customers.

Although not confirmed to be related, at roughly the same time, strange things were happening on the BTC chain. Normally, an average time in between new blocks is 10 minutes. But as this fire was ranging, the next new block didn’t appear for approximately two hours, a remarkable event that would land solidly in the top dozen longest gaps between blocks.

Ethereum World News noted that this caused a drop from 91 exahashes to 90, but could have been significant enough to have a factor on the block time. At the same time though, the difficulty of mining a new block continues to increase.

CoinGeek reached out to Ilya Bruman, CEO of Minery, to ask for comment on the fire. “We offer sincere condolences and sympathy to our Chinese colleagues. It can happen to anyone,” Bruman began. “I don’t think there is any connection between this fire and drop of hashrate.”

Bruman went on to explain the current trend in BTC hashrates:

Hashrate started to drop from 108 EH immediately after the price of BTC dropped down to 8000 USD. If the measures of fire are correct, then I assume that burnt equipment produced the hashrate between 0,5 EH and 1 EH. Which is not affecting the network dramatically.

When asked how a mining operation typically guards against this type of calamity, Bruman noted, “First of all we have fire extinguishing systems on all of our sites. Second, we secure our sites and our client’s equipment.”

Editor’s note: This article has been updated with quotes from Ilya Bruman, CEO of Minery

PBoC dismisses talk of ‘imminent’ China cryptocurrency launch

The People’s Bank of China (PBoc) has dismissed talk of an imminent launch of its new cryptocurrency, citing the need for more time to address outstanding regulatory issues, state media outlet Xinhua reported.

The central bank had previously said its sovereign digital cryptocurrency was “almost ready,” leading to speculation in local press that it could be launched as soon as November. In fact, November 11 had been identified by some commentators as a potential date for the launch, coinciding with China’s Single’s Day, one of the busiest online shopping dates in the calendar.

However, the governor of the People’s Bank of China, Yi Gang, doused any further speculation in comments made at a press conference in Beijing, telling reporters the project did not “have a timetable.”

Development activity would continue, he said, in order to allow time for more work on “research, testing, trials, assessments and risk prevention.”

If the [sovereign] digital currency involves cross-border use, it will involve a series of regulatory issues regarding anti-money-laundering, anti-terrorism financing, anti-tax evasion as well as know-your-client protocols.

China is the first of the world’s major economies to begin work developing a state-backed stablecoin. Work has been underway since 2016, when the bank set up a dedicated research institute to explore the technology and how a fiat-backed stablecoin would work in practice.

Since then, the PBoC has acquired numerous patents covering elements and applications of its technology, yet has remained tight lipped on the specifics of the development work around their cryptocurrency.

Development activity appeared to speed up following the announcement of Facebook’s Libra last spring, and there have been suggestions of an approaching launch for China’s central bank ever since.

The PBoC has said that in time, the cryptocurrency will have the same legitimacy as current yuan banknotes, with the bank expecting digital transactions to replace fiat notes altogether in time.

With the news appearing to contradict recent speculation around the launch of the cryptocurrency, it looks as though the world will have to wait a while longer for China’s cryptocurrency. When it does eventually go live, the launch will be watched with keen interest from central banks elsewhere, with institutions in a number of countries reported to be considering similar proposals. 

Bitmain might be about to decimate BTC miners

Market manipulation is a common topic in the digital currency space, often driven by concerns that whale investors may be manipulating cryptocurrency prices and trends to maximize their own profits. But could Bitmain, the mining hardware manufacturer, be preparing for a devilish scheme to crush outdated mining operations?

As the price of BTC hovers between $10,000 and 11,000, and could be a couple of big days away from its all time high, it remains popular as a mining option. CoinGeek has learned from its sources that Bitmain may be planning to take advantage of the current environment by using their resources to crush the profits of older mining hardware.

They’ll accomplish this goal by bringing as much hash to bare on the BTC blockchain as they possibly can, through old mining rigs and new, effectively cranking up the difficulty of BTC mining. Block rewards will be nearly impossible to win for those with older hardware.

For miners, and especially Chinese miners, this could be disaster. With a small leap in total hashing power brought to bear on the BTC blockchain, the increase in difficulty will devastate profits for most miners. They will be holding on and praying that electricity rates stay low to make any profit at all.

The Chinese hydro season, or when rains are sufficient enough to keep hydroelectricity flowing cheaply, can help make crypto mining more profitable. That season typically lasts into September or October. As the dams begin to dry up, electricity costs will steadily increase. That, combined with an increase in hash power, will completely crash mining profits.

The intended consequence of this gambit is simple. To stay competitive in the mining sector, operations will be forced to upgrade to the latest hardware, perhaps from Bitmain, or run their operation into the red against the hash power of Bitmain.

This could end up being a fairly profitable venture for Bitmain if it works, but our sources are worried it will be a bloodbath for the BTC mining community. Operations that can’t afford to upgrade will be run into the ground, and those that can will be paying a premium just to help Bitmain’s bottom line.

This isn’t what miners need right now. With the long crypto winter of 2018 still very recent in their memory, many operations are still working to get their head above water for all the deficits they had to run for so long. And now that BTC prices have recovered, competition is naturally making mining more expensive. Operations having to spend $0.08 or more per kilowatthour (kWh) are already likely back in the red.

If these reports are true, Bitmain might be about to cripple the mining industry for their own short term profit. Not exactly the community building move that the crypto world needs right now.

Bitcoin Association runs massive BSV network demonstration

Even when put on the spot, the Bitcoin SV (BSV) blockchain has proven that it can handle massive amounts of transactions. It had to recently, when the Bitcoin Association conducted a network demonstration for developers interested in working on the BSV chain.

The two day event was held in Hangzhou, China, with over 100 attending. On September 19, 16 speakers spoke to the crowd about their experiences and hopes for the BSV ecosystem.

On September 20, the Bitcoin Association conducted the Developers Dialogue, with 35 developers attending. Members of Mempool, Weiblock, Cityonchain, Bitmesh, and RelayX spoke to the assembled talent about their projects and thoughts about building on Bitcoin. To stress to the developers how capable the BSV network is in handling large loads, BSV supporter Aaron Zhou was invited. You might remember him from a 2 million transaction test from August 2019.

He was asked to show what the blockchain was capable of once again, and he pulled it off. In a massive demonstration, Zhou fired 700,000 transactions in just under an hour into the blockchain in at 9:00am UTC.

The demonstration can be seen on the blockchain starting at block 600824, where SVPool mined a 33MB block of 127,767 transactions. The final, and biggest block, was mined by CoinGeek, at 97MB and 365,832 transactions.

Lise Li, the Bitcoin Association’s China Manager, commented that while the demonstration was running, the developers chatted warmly, and they discussed the results at the end of it. They were pleased to note that the blockchain was able to handle all of it without a hiccup, and took note of how different mining pools take their own strategies in how they set limits on what they’ll mine.

For anyone invited to attend this demonstration, it’s a perfect example of how the BSV chain isn’t just big blocks in theory or testing, but big blocks anytime it’s necessary. This would be an inspiring show for developers looking to get their enterprise on the BSV blockchain: they’re now certain the BSV can handle their data whenever necessary.

Bitcoin SV network demonstration wows developers in China

Even when put on the spot, the Bitcoin SV (BSV) blockchain has proven that it can handle a large amount of transactions. It had to recently, when Aaron Zhou conducted a network demonstration for developers interested in working on the BSV chain.

At a two day BSV event held in Hangzhou, China, with over 100 attending, 16 speakers spoke to the crowd about their experiences and hopes for the BSV ecosystem.

On September 20, 35 developers attended from companies like Mempool, Weiblock, Cityonchain, Bitmesh, and RelayX. They spoke to the assembled talent about their projects and thoughts about building on Bitcoin. To stress to the developers how capable the BSV network is in handling large loads, BSV supporter Aaron Zhou was there to perform a network demonstration. You might remember him from a 2 million transaction test from August 2019.

He was asked to show what the blockchain was capable of once again, and he obliged by firing off 700,000 transactions in just under an hour at 9:00am UTC.

The demonstration can be seen on the blockchain starting at block 600824, where SVPool mined a 33MB block of 127,767 transactions. The final, and biggest block, was mined by CoinGeek, at 97MB and 365,832 transactions.

While the demonstration was running, the developers chatted warmly, discussed the results as the event wound up. They were pleased to note that the blockchain was able to handle all of it without a hiccup, and took note of how different mining pools take their own strategies in how they set limits on what they’ll mine.

But for any developers out there looking to recreate this test themselves, please don’t forget that the Bitcoin Association’s Bitcoin SV Node project encourages you to use the Scaling Test Network (STN). It’s been perfectly set up for enterprises to see exactly how their applications will perform on a blockchain that can scale massively.

For anyone invited to attend this demonstration, it’s a perfect example of how the BSV chain isn’t just big blocks in theory or testing, but big blocks anytime it’s necessary. This would be an inspiring show for developers looking to get their enterprise on the BSV blockchain: they’re now certain the BSV can handle their data whenever necessary.

Lin Zheming: Expanding Bitcoin SV adoption into China

China is an incredibly important country for the Bitcoin industry. With a large number of miners and application developers, getting China on board with the future of Bitcoin SV (BSV) is crucial. To explain how that can be done, Lin Zheming, Co-founder and CEO of Mempool, joined our Becky Liggero on the sidelines of CoinGeek Toronto 2019.

China is just too big of a market to ignore, and they’re one that’s keen to take part in the new Bitcoin economy. “It consists of a lot of purchasing power and production lines, and it plays a very important [role] in the world economy,” Zheming explained. “So we cannot miss the part of Chinese onboarding. And because of the investment and the speculating nature of Chinese, We’re likely to know deeper of Bitcoin SV. If they know more, there are so much more developers want to poor into the BSV side. So there were help with the world to have a better Bitcoin.”

To do that, Bitcoin services, and the BSV community, need to always keep their Chinese audience in mind. “I think that the most important part is that you need to set up a Chinese version of website, and you need to have an interface, your documents, written in Chinese so that those Chinese developers and users can get along very easily,” he said. “Besides from that, you need to know this is quite different policies, different regulations, between different markets. So, like in China, you cannot easily get your application published on app store, and there is no Google Play available in China. You need to find other localized markets to publish your application. So if they think that the market of China is very important, they need to find someone who really know about the market to help them.”

Doing that on social media can be tricky though, as the great firewall of China keeps everyone off of Twitter or Facebook. WeChat becomes the main avenue of conversation. “It’s just like in Facebook, why would those applications use Facebook as their main channel to touch their users?” he asked. “Because people love Facebook. Many people use Facebook half of their total internet usage. In China, WeChat consists about no more than, I think consist of 70% of the total usage hours of average people.”

But how does WeChat become the way Chinese citizens can become BSV adopters? Zheming explained how it works:

We use the blocking platform. We use WeChat to authorize the blocking for the users to log into our website…. So basically, if I need to send out some money to a new user, I just put the money into a voucher. The private key of the vouchers is held by us, but if the receiver comes online and they accept it, we can get the blocking token of the receiver so that we will transfer those funds directly to the account of the receiver.

Bitcoin Association hires Lise Li as China manager to grow Bitcoin SV in the region

Bitcoin Association has named Lise Li as its new China Manager. Lise is the former Chief Operating Officer of Rawpool, a Bitcoin mining pool in China. Based in Beijing, Lise will implement a comprehensive strategy for growth of Bitcoin Satoshi Vision (BSV) throughout China – a key market for the Bitcoin industry. This includes work to highlight the unique capabilities of the Bitcoin SV blockchain to developers, enterprises, miners, venture investors, and Bitcoin users.

Bitcoin Association is the global industry organization for the business of Bitcoin. It supports BSV as the only coin with a blockchain that significantly scales (now), has robust utility (now), and is committed to a set-in-stone protocol for developers to build on. BSV is also the only project that adheres to the original design of Bitcoin creator Satoshi Nakamoto. In short, BSV is Bitcoin.

Lise Li brings valuable China market experience and relationships to Bitcoin Association and BSV’s growth. At Rawpool, Lise’s responsibilities included a digital mining project, management of the mining pool operation, expanding customer accounts, and technical research and cryptocurrency industry analysis. Lise also worked for 8 years in the e-commerce industry. She holds a Bachelor’s Degree in Finance from the University of International Business and Economics in Beijing.

Reacting to her new role, Lise said: “I believe in Bitcoin SV because its scaling ability puts the BSV blockchain technologically far ahead of any other and enables more real use cases. That’s why I see more development teams and businesses across the world are building projects on BSV. I am tremendously honoured for the opportunity to join Bitcoin Association, and will contribute my experience with crypto mining and blockchain technology to help grow BSV’s ecosystem.”

Jimmy Nguyen, Founding President of Bitcoin Association, remarked: “It’s time for Bitcoin Association to expand globally, and Lise is a terrific choice to lead our China program. Lise is an enthusiastic supporter of BSV, has excellent technical knowledge of cryptocurrency mining, and brings wonderful connections throughout China’s Bitcoin and technology sectors. We are thrilled to welcome Lise to the Bitcoin Association family.”

UPCOMING:  COINGEEK SEOUL CONFERENCE – October 1-2

Come to Seoul, South Korea to learn about “The Power of BSV Scaling” and Bitcoin SV’s massively-scaled blockchain enables businesses to build more powerful applications. Join the top names in Bitcoin at the CoinGeek Seoul conference October 1-2. 

Is ABC’s end game plan to help China sideline Bitcoin?

Is ABC’s end game plan to help China sideline Bitcoin?

Much has been said about the recent Bitcoin Cash (BCH) hash war, and its conclusion—with the ABC camp declaring premature victory thanks to an artificial burst from “rented” hash power—has brought forth even more questions like, why did ABC and its supporters wasted millions of dollars of their money and tens of millions of other people’s money in the fight? What’s in it for them?

Far from creating a state of anarchy, it appears that the ABC faction may have been working for the Chinese government after all.

In early December, a lawsuit launched by Florida-based blockchain company United American Corp. (UAC) accused Bitmain, its co-founder Jihan Wu, along with his “team of conspirators” composed of Bitcoin.com CEO Roger Ver, ABC developers Amaury Sechet, Shammah Chancellor and Jason B. Cox, as well as Kraken and its CEO, Jesse Powell, of working “with the knowledge and support of the Chinese government to stage a premeditated hostile takeover” of the BCH network.

The Chinese government is known for its hardline approach towards cryptocurrency-related activities, banning cryptocurrency exchanges and initial coin offerings (ICOs) last year. But the country’s central bank, the People’s Bank of China (PBOC), is also planning its own digital currency—the central bank digital currency (CBDC)—as part of the government’s bid to have more control over the country’s financial system.

The CBDC project was the brainchild of former PBOC Governor Zhou Xiaochuan, who has made it his goal to protect the country from technologies that are “designed and controlled by others,” like Bitcoin.

To date, the Chinese central bank has registered 78 digital currency patents, Bloomberg reported. PBOC also ranks fifth in the world when it comes to blockchain-related patents, with 44 as of August, according to China’s IPRdaily. One of its more recent patents, filed in June, is for a digital wallet that will allow users and business to trade their yuan for digital currency, which can be used for payments. Users can also track their transactions using the wallet, which will be built in coordination with a centralized digital currency issuance registration agency. In short, the PBOC will be able to track all transactions too.

In comparison, nChain has been making an effort to patent new ideas and technology in a bid to protect the technology rather than stifle development. With nChain’s protective patents, the technology can be used by people developing on the SV chain, but not by malicious actors such as the Chinese government.

ABC’s end game plan

So how does the ABC faction fit in all of this?

It would be recalled that on the November 15 network upgrade, a sudden huge wave of hash magically came to support ABC. This is all thanks to Bitcoin.com’s pool, which boosted its BCH for only 24 hours by moving customer hash from the BTC chain. ABC also received more support from “rented” hash from BTC mining pools controlled or friendly to Bitmain. In exchange, Bitmain must pay to subsidize the difference in lower revenue miners receive on the BCH chain when total hash rate grows, compared to mining on the more profitable BTC network, which BTC.top CEO Jiang Zhuoer estimated can cost over 100 million yuan ($14 million) per day.

The rented hash supporting ABC is temporary, which means the endeavor was a losing proposition for Bitmain and the rest of the group. Now, the ABC camp is also being accused of being backed by the Chinese government, all in an effort “to centralize the Bitcoin Cash network resulting in Chinese entities now having established dominance over this important segment of the cryptocurrency market with proprietary software checkpoints and instituting other means of control over the system,” according to the UAC lawsuit.

The hash war may have ended, but it’s clear that the fight to bring the truth to light has just begun. It’s also clear that the attacks on the original Bitcoin, first with Bitcoin Core (BTC) and more recently with ABC, have cost the ecosystem a lot of time—in development and in pushing for adoption.

But with everybody coming together on Bitcoin SV, the only cryptocurrency the only coin that can massively scale on chain and also provides for fast transactions at low fees, it’s only a matter of time before we achieve the original Satoshi Vision for Bitcoin—that of a “peer-to-peer electronic cash system.”

We’re inviting everyone—from exchanges to payment processors, miners, merchants, app developers and others—to work with us and make Bitcoin SV global money today.

China wants to use blockchain audits for big data

China wants to use blockchain audits for big data

Cryptocurrencies are clearly not welcome, but blockchain technology may be fair game.

Despite basically choking the life out of cryptocurrencies in the country, China may be looking to use blockchain technology to “improve the data storage, management, transmission and other work modes in future big data audits.” At least, this was the suggestion released by the office of the National Audit of the People’s Republic of China.

In the release, the office outlines a “more optimistic” view and exploration of possible uses of blockchain technology in the country, particularly in processes that involve the audit office. A rough translation of the document points to perceived problems in the future when the amount of data the office handles increases.

“At present, audit data is managed using a centralized storage method, which is first collected by the accredited agencies to audit objects, then uploaded to the Audit Office Data Center (hereinafter referred to as the data center), and then centrally managed by the data center. The accredited agencies do not store relevant data. Although this management model has a high level of data security and legitimacy, it will also result in unlimited expansion of data center hardware and software equipment requirements. It will never be able to meet the endless cycle of data storage and management, resulting in more data center workload.”

The office also states that developments using blockchain technology would be in accordance with General Secretary Xi Jinping’s goals of strengthening the country in terms of science and technology and big data management. They add that it will help them keep up and streamline their processes to meet the development goals laid out at the 19th National Congress.

“There is still a distance between General Secretary Xi Jinping and the requirements of the Audit Committee Party Group, which requires us to Improve the system at work, earnestly implement it, and achieve results. The “blockchain” concept and technology will open a skylight for us to resolve this problem.”

The office wants to tap on blockchain technology’s capabilities to help monitor activities and automate records.

“The “blockchain” technology’s encryption algorithm, timestamp, and data self-management [will] enable the data center to track and record every auditor’s data events and other activities that require data collection, identity management, and the creation of auditor data operations.”

While blockchain technology may be getting a warmer welcome from the Chinese government, cryptocurrencies remain generally unwelcome in the country (except maybe for the one the government is developing themselves). It looks like this may not be changing for a while based on active enforcement by officials. Earlier this week, authorities seized 600 computers which they believed were being used for mining activities due to unusually high electric usage. Earlier this month, police even crashed and stopped a blockchain conference altogether. Yet cryptocurrency enthusiasts in the country are relentless, resorting to underground activities to continue their participation in the crypto economy.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
600 computers seized in China's crypto mining crackdown

600 computers seized in China’s crypto mining crackdown

China’s disdain for all things crypto continues to grow. In the latest example, authorities seized 600 computers and related hardware in Tianjin earlier this week, due to abnormally high electricity usage in the city, Xinhua reported. It turns out that the hardware had been used to set up a large cryptocurrency mining operation, which was uncovered by the local utility company. That company then informed the police, who launched an investigation.

During the investigation, five individuals were identified as “persons of interest,” but no other details were made available. An additional person was detained for his involvement.  Whether any will be charged with criminal activity has not yet been announced.

According to the Chinese news outlet, this was the largest case of power theft recorded in a long time. However, there was doubt over whether the actions constituted theft, since it appeared the electricity was being purchased legally. The operations run afoul of Chinese laws, though, since authorities were not notified beforehand of the mining activities.

The move will certainly have Chinese miners looking for options outside of the country. China has been the home to the majority of the world’s cryptocurrency mining, but this could change soon. The Chinese government has taken a hard stance against cryptocurrency-related operations, already resulting in some companies shutting down completely and others leaving for other locations.

The recent crackdown indicates a reversal of policy. Many thought China would be loosening up on cryptocurrencies, but it would now seem to not be the case. The country’s central bank will also become stricter, tightening the screws on miners’ power usage in the country.

The result of the actions is an increase in mining operations in other countries. Iceland and Canada have gained favor recently due to the low electricity costs. This shift will more than likely continue, ultimately pushing all cryptocurrency businesses out of the country completely.

Last year, China banned trading between cryptocurrencies and the Chinese Yuan. The over-the-counter (OTC) trading had been gaining in popularity before being squashed by the People’s Bank of China. The country has also been targeting other trading platforms, and it would seem that crypto isn’t feeling the love anymore in China.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
Tech firm Xunlei comes under fire over ‘disguised’ ICO

Tech firm Xunlei comes under fire over ‘disguised’ ICO

Beleaguered technology company Xunlei has become the subject of several class action lawsuits from investors who have bought the company’s digital token, LinkToken.

As with all too many initial coin offerings (ICOs), Xunlei is accused of misleading its investors who have chosen to invest in the company’s much trumpeted digital coin. However, the NASDAQ-listed firm is fighting with some vigour.

At the Boao Forum for Asia last week, Xunlei CEO Chen Lei refuted the allegations that the company intentionally misled investors so that it could carry out an ICO in China. Xunlei offers a device called OneThing Cloud, which allows users to share their idle internet bandwidth and storage in exchange for LinkToken, according to a South China Morning Post report. However, Lei insisted that the company did not intend to issue any funds through the token and it was not a public offering.

“By making a public offering, really you need to use it to raise money. We have never used a coin to raise any money at all, that’s never our intention,” Lei said, according to the news outlet.
Xunlei launched LinkToken in October 2017 along with several other initiatives, in hopes of entering the blockchain market. Interestingly, the company’s stock price boomed substantially after the launch with real bullish action but it has now more than halved from a record high of $25 in November, when it soared by no less than 500%.

However since that bright period, the shares of Xunlei have sunk to a low of $10 in early April, with several U.S.-based investors seeking class action against the company for allegedly misleading them regarding the company’s activities between October 2017 and January 2018. The investigators claimed Xunlei required them to purchase hardware from the company to share internet bandwidth.

In response, Lei hinted that he would be hiring legal assistance to fight the claims, noting that he fully supports any regulatory action against ICOs.

“We are a small capital company, so our stock price does fluctuate, but I don’t think there’s any basis for the lawsuit because we’re operating in China and it is the Chinese law and regulations that we need to observe,” he said, adding that “the definition of [an] ICO has to be interpreted in the Chinese market.”

In January, China’s National Internet Finance Association (NIFA) concluded its investigation into LinkToken with a finding that Xunlei had attempted to evade regulations by conducting an “initial miner offering.”

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
Arrests made in $13M Chinese crypto pyramid scam

Arrests made in $13M Chinese crypto pyramid scam

Authorities in China have arrested four people in the city of Xi’an in connection with a suspected cryptocurrency pyramid scam, according to local media reports.

The arrests were made over allegations that the scheme had conned some 13,000 individuals, with a total of over 86 million yen ($13 million) reported to have been collected. Police arrested a primary suspect, along with three others suspected of assisting in the scheme.

The suspect, known only at this stage as Zheng, is said to have begun planning the scam back in October 2017. Police suspect the scam revolved around the Da Tang Coin (DTC), an altcoin linked to a company called DTC Holding.

Investigators said the scheme involved offering investors a guaranteed return of approximately $13,000 per day, in return for an investment of $480,000 in DTC—which were offered at $0.50 per coin.

The scam allegedly attracted significant volumes of investment in the space of just two weeks, from March 15-28, with the company reaching out to investors in locations including Xi’an, Ningbo and Phnom Penh.

It is also alleged that the firm secured the services of a ‘foreign-looking’ man in order to create the appearance of an international blockchain startup that is heavily backed by other investors.

Investors were promised a return on their money when DTC was ultimately listed on major cryptocurrency exchanges, and were told of a range of real-life applications for the token, including in retail and education.

While labelled a pyramid scheme by investigating officers, some analysts have highlighted that the plan more closely resembles a Ponzi scam. Either way, officers believe the men to have been involved in the latest cryptocurrency scam to target unsuspecting investors.

In 2017 alone, China reported some 47,000 victims of cryptocurrency scams, like the alleged scam in the present case. Around 40 arrests have been made to date, leading to the Ministry of Public Security promising to ‘purify cyberspace’ to protect victims.

The pledge comes in light of a wider crackdown in China, with authorities keen to prevent scams of this kind from taking hold. The arrests this week will do little to dampen the appetite of regulators in keeping a tight grip on cryptocurrency activities in China.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.