Chinese Filecoin mining firm charged for allegedly orchestrating $83.3 million pyramid scheme

Quick Take

  • A Chinese local court recently heard the case of Shenzhen Shikongyun Technology, one of the largest Filecoin firms in China.
  • The company is accused of earning $83.3 million by inappropriately enticing users to mine the coins through its platforms, the court said Monday.
  • This came after China banned all crypto transactions in September 2021, which led to a broader crackdown on the crypto industry on the Chinese mainland.

A Chinese court recently heard a case for a Chinese Filecoin mining firm and its four executives for their alleged involvement in an $83.3 million pyramid scheme, the court said.

In a social media post published Monday, the local court in Pingnan county in the Guangxi autonomous region said that it had started the trial of Shenzhen Shikongyun Technology and its four executives including founder surnamed Lai, who are suspected of organizing and leading pyramid scheme activities. The case is currently undergoing further trial proceedings.

Prosecutors alleged that the defendants enticed customers under the guise of mining FIL coins on the company’s platform. They demanded individuals to qualify for participation by paying fees for purchasing mining equipment or leasing mining machines, the post said.

“With the lure of substantial returns, they enticed further participation and deceived individuals to gain assets, disturbing the economic and social order,” the prosecutors said in the post. 

Shut down in May 2022


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The post said that the company had set up and platforms, and had built a website with the domain name to inappropriately promote its services.

When the company was “busted” by the Chinese authorities in May 2022, it had dozens of thousands of users on its platforms and had obtained over 606.95 million yuan ($83.3 million) through the and sites, according to the post.

A former employee of Shenzhen Shikongyun told The Block today that the company was well aware of the risks of operating on the Chinese mainland and had planned to expand overseas before the executives were arrested and brought into custody last year. The former employee requested anonymity due to the sensitivity of the matter.

Unlike its neighboring Hong Kong which is actively developing the crypto and Web3 industries, China banned all crypto transactions on the mainland in September 2021.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Timmy Shen is an Asia reporter for The Block. Previously, he wrote about crypto and Web3 for Forkast.News from Taiwan after spending more than three years in Beijing covering finance and current affairs at Caixin Global and Chinese tech at TechNode. His China-related reporting has also appeared in The Guardian. When he's not chasing headlines, you'll find him savoring hot pot and shabu shabu in a Taipei local haunt. Timmy holds an MS degree from Columbia University Graduate School of Journalism. Send tips to [email protected] or get in touch on X/Telegram @timmyhmshen.


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