Extradition of Crypto Pyramid Scheme Architect Prompts Global Attention

Cryptonews Politics John Brightwater August 23, 2024

Extradition of Crypto Pyramid Scheme Architect Prompts Global Attention

In a significant development, Zhang Moumou, the alleged mastermind behind a large-scale crypto pyramid scheme, has been extradited from Thailand to China following an extensive international manhunt. This event is particularly noteworthy as it represents the first successful extradition under the China-Thailand Extradition Treaty, which was established in 1999, as reported by The Paper, a reputable Chinese media outlet.

Since 2012, Mr. Zhang has led a criminal organization known as the MBI Group, which orchestrated a complex online pyramid scheme that duped countless victims by creating and promoting virtual digital currencies. Participants in this scheme were required to pay substantial fees ranging from 700 to 245,000 yuan (approximately $98 to $34,316) to join, with their earnings dependent upon recruiting additional members and their own investment amounts. Over time, the operation ensnared more than 10 million individuals, ultimately resulting in financially significant losses that exceeded 100 billion yuan (around $14 billion).

Given the vast scope and intricacy of MBI Group’s activities, Mr. Zhang was categorized among China’s most wanted suspects related to economic crimes. In November 2020, the Chongqing Municipal Public Security Bureau officially pressed charges against him, leading the Interpol China National Central Bureau to issue a red notice for his capture by March 2021. The Thai police successfully apprehended Mr. Zhang on July 21, 2022, a pivotal moment in the ongoing investigation.

The extradition process, however, proved to be intricate and prolonged. Following China’s formal extradition request under the bilateral treaty with Thailand, the Thai Court of Appeal delivered a favorable ruling on May 21, 2024. The Thai government subsequently confirmed this decision on August 14, 2024, which enabled Mr. Zhang’s return to China a few days thereafter. This operation was the result of a collaborative effort involving China’s Ministry of Public Security, the Chinese Embassy in Thailand, and Thai law enforcement services, all of which functioned under the ambit of China’s ongoing initiative termed “Fox Hunting Operation” aimed at combating international economic crimes.

Despite China’s stringent restrictions on cryptocurrency transactions imposed in 2021, the populace remains susceptible to investment scams within the crypto space. Authorities in China, while prohibiting trading activities, still recognize cryptocurrencies as virtual property, thereby affording investors legal protection for their digital assets.

Additionally, a recent report by Chainalysis, published on August 15, indicated a decline in overall illicit cryptocurrency transactions for the year 2024. Nevertheless, particular criminal activities have surged, with incidents of hacking and ransomware becoming increasingly common. The report highlighted a notable increase in stolen funds due to hackers and ransomware attacks, revealing that by the end of July, the cumulative value of stolen cryptocurrencies had ballooned to $1.58 billion—an 84% rise compared to the same time frame in 2023. While the overall number of hacking cases grew only slightly (2.8% year-over-year), the average sum taken per incident witnessed a remarkable upsurge. In July alone, hackers appropriated approximately $266 million across sixteen distinct breaches, significantly impacting the crypto sector. One of the most impactful incidents occurred during a July 18 attack on the Indian crypto exchange WazirX, which accounted for over $230 million, representing 86.4% of the monthly losses. This string of events underscores the persistent challenges posed by fraudulent activities within the cryptocurrency arena, prompting continued scrutiny from authorities.