A Filecoin (FIL) mining company is being sued by Chinese authorities over allegations of running an $83 million pyramid scheme.
According to a new social media post, the local court in Pingnan Province of Guangxi Autonomous Region says criminal proceedings have been initiated against one of the country’s largest Filecoin mining companies, Shenzhen Shikongyun Technology and its four executives.
Prosecutors allege that the company “exaggerated the technology’s profit prospects” to entice investors to participate in mining Filecoin on the company’s platforms.
To join its mining operation, the company would have required new entrants to pay for the purchase of mining equipment or their rental costs.
According to the post, prosecutors allege that the company has set up a website and an official WeChat account to promote its operations, as well as the filpool.io and bpool.io platforms.
The company amassed nearly 100,000 members between February 2021 and May 2022, from which they allegedly brought in 606.95 million yuan ($83.3 million).
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 long-term storage solutions and competitive storage pricing.
At the time of writing, Filecoin is trading at USD 3.80, down 5.4% in the past 24 hours.
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Featured image: Shutterstock/Stock Picture Store/Alex_Bond