A Fujian-based Group in China Organized a Pyramid Scheme in the Name of Virtual Currency and NFTs; Court of Second Instance Rejects Their Appeal

By: theblockbeats.news|2025/09/02 15:32:22
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BlockBeats News, September 2nd, 2023. During the period from May to August 2023, Li and others, under the guise of issuing a certain cryptocurrency, built a hierarchical reward mechanism based on invitation relationships. They formed groups through social platforms, conducted online and offline promotions, and publicly promoted to the general public, enticing participants to qualify for membership through activities such as purchasing cryptocurrency, staking assets, and auctioning NFTs, and received rebates based on developing a downline. By the time of the October 2023 incident, the organization had developed multiple levels and had raised funds equivalent to over 20 million RMB.

The Shishi City Procuratorate of Fujian Province determined through its review that while this organization used new concepts such as cryptocurrency and NFTs for packaging, its operating model still met the criteria of the crime of organizing and leading MLM activities as stipulated in the Criminal Law of the People's Republic of China: Firstly, the project established a "threshold fee" through activities like purchasing cryptocurrency and participating in private placements of virtual assets as a prerequisite for joining and developing others. Secondly, it established clear superior-subordinate relationships and a hierarchical structure, using the number of developed personnel and subordinates' performance as the basis for rewards and rebates. Thirdly, it lacked genuine business activities and sustainable sources of income, relying on the funds from new members to pay out returns to previous entrants and exhibiting obvious characteristics of fraudulent behavior.

Li and others manipulated backend parameters and artificially intervened in the so-called "synthetic probability" and "release mechanism" to create a profit illusion, enticing participants to continuously invest and expand their downlines. This behavior falls under the category of using new technological concepts to conceal traditional MLM crimes, severely infringing on the property rights and interests of the public and disrupting economic and social order.

In June 2024, the Shishi City Procuratorate initiated a public prosecution against the members of this criminal group. In December 2024, the court of first instance sentenced the four defendants to prison terms ranging from six years and six months to three years for the crime of organizing and leading MLM activities, in addition to fines and the confiscation of illegal gains. After the defendants appealed, in July 2025, the second-instance court ruled to reject the appeal and uphold the original verdict. (Net of Justice)

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BeatSwap is evolving towards a full-stack Web3 infrastructure, covering the entire lifecycle of IP rights.

The core product "Space" is scheduled to launch in Q2 2026, driven by SocialFi


BeatSwap, a global Web3 Intellectual Property (IP) infrastructure project, is attempting to overcome the current fragmentation limitations of the Web3 ecosystem, building a full-stack system that covers the entire lifecycle of IP rights.


Currently, most Web3 projects are still in the stage of functional fragmentation, often focusing only on a single aspect, such as IP asset tokenization, transaction functionality, or a simple incentive model. This structural dispersion has become a key bottleneck hindering the industry's scale application.


BeatSwap's approach is more integrated, integrating multiple core modules into the same system, including:


· IP authentication and on-chain registration

· Authorization-based revenue sharing mechanism

· User-engagement-driven incentive system

· Transaction and liquidity infrastructure


Through the above integration, the platform builds an end-to-end closed-loop path, allowing IP rights to complete a full cycle of "creation, use, and monetization" within the same ecosystem.


Expanding from Web3 to a broader market: Restructuring the music industry's supply-demand structure


BeatSwap is not limited to existing crypto users but is attempting to take the global music industry as a starting point, actively creating new market demand. Its core strategies include:


Exploring and incubating music creators (Artist discovery)

Building a fan community

Igniting IP-centric content consumption demand


The current global music industry is valued at around $260 billion, with over 2 billion digital music users. This means that the potential market corresponding to the tokenization and financialization of IP far exceeds the traditional crypto user base.


In this context, BeatSwap positions itself at the intersection of "real-world content demand" and "on-chain infrastructure," attempting to bridge the structural gap between content production and financial flow.


"Space" to Launch in Q2 2026: Building the Core of SocialFi


BeatSwap's upcoming core product "Space" is scheduled to launch in the second quarter of 2026. This product is defined as the SocialFi layer in the ecosystem, aiming to directly connect creators with users and achieve deep integration with other platform modules.


Key designs include:

A fan-centric interactive mechanism

Exposure and distribution logic based on $BTX staking

User paths connected to DeFi and liquidity structures


Thus, a complete user behavior loop is formed within the platform: Discovery → Participation → Consumption → Rewards → Trading


$BTX Token Mechanism: Evolving from an Incentive Tool to a Value Carrier


$BTX is designed to be a core utility asset within the ecosystem, rather than just a simple incentive token, with its value directly tied to platform activity and IP use cases.


Main features include:


· Yield distribution based on on-chain authorized actions

· Value reflection based on IP usage and user engagement dynamics

· Support for staking and DeFi participation mechanisms

· Value growth driven by ecosystem expansion


With the increased frequency of IP use, the utility and value support of $BTX will enhance simultaneously, helping alleviate the "disconnect between value and utility" issue present in traditional Web3 token models to some extent.


Accelerating Global Exchange Layout: Enhancing Liquidity and Accessibility


Currently, $BTX has been listed on several mainstream exchanges, including:


Binance Alpha

Gate

MEXC

OKX Boost


As the launch of "Space" approaches, BeatSwap is actively pursuing more exchange listings to further enhance liquidity and global accessibility, laying a foundation for future market expansion.


Beyond Web3: Aiming for a Larger-Scale Integration of Content and Finance Markets


BeatSwap's goal is no longer limited to the traditional Web3 narrative but aims to target over 2 billion digital music users and a trillion KRW-scale content market.


By integrating content creators, users, capital, and liquidity into a blockchain framework centered around IP rights, BeatSwap is striving to build a next-generation infrastructure focused on "IP tokenization."


Conclusion


BeatSwap integrates IP authentication, authorization distribution, incentive mechanism, transaction system, and market construction to establish a unified structure that bridges the full lifecycle path of IP rights.


With the launch of the Q2 2026 "Space," the project is expected to become a key infrastructure connecting content and finance in the IP-RWA (Real World Assets) track.


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