A Filecoin (FIL) mining company is facing charges from Chinese authorities over allegations of running an $83 million pyramid scheme.
According to a new social media post, the local court in Pingnan county in the Guangxi autonomous region says criminal proceedings have begun against one of the country’s largest Filecoin mining companies, Shenzhen Shikongyun Technology and its four executives.
Prosecutors allege that the company “exaggerated the profit prospects of the technology” to entice investors to participate to the mine Filecoin on the company’s platforms.
To join its mining operations, the company allegedly required new participants to pay for the purchase of mining machines or their rental fees.
According to the post, prosecutors allege that the company set up a website and an official WeChat account to promote the operations as well as platforms filpool.io and bpool.io.
The company amassed nearly 100,000 members between February 2021 and May 2022, from which they took in 606.95 million yuan ($83.3 million), according to the allegations.
China banned all crypto transactions from its mainland in September 2021. Meanwhile, neighboring Hong Kong is embracing crypto.
Filecoin was launched in 2020 as a decentralized file sharing and storage service, designed to provide reliable longterm storage solutions and competitive storage pricing.
At time of writing, Filecoin is trading for $3.80, down 5.4% in the last 24 hours.
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Featured Image: Shutterstock/Stock Picture Store/Alex_Bond