Unveiling the "New Investment Eyewash": Beware of Virtual Money Wealth Management Traps

Recently, "Xinkangjia" has become a hot topic on social media platforms and investment chat groups. It is reported that the platform has been active since 2023, operating under the name "Dubai Gold Exchange China Branch." Initially, it used crude oil futures investment as a pretext, later shifting to areas such as "big data investment," "foreign exchange investment," and "Virtual Money investment" to attract investors. Participants are required to pay a threshold fee of 1000 USDT to become members and develop downlines according to a "militarized" organizational structure, with a rebate mechanism existing between different levels.

On June 26 this year, the Xinkangjia platform fully closed its withdrawal channels. It is reported that approximately 2 million investors in China have been affected, with the amount involved reaching around 18 billion. More seriously, these funds may have been transferred in the form of USDT and have undergone coin mixing operations.

It is worth noting that as early as April this year, the Dubai Gold and Commodity Exchange (DGCX) officially announced that it has not established any affiliated institutions or partners in China. In addition, since 2024, multiple departments in mainland China have also issued warnings regarding 鑫慷嘉.

Legal Risks of the Xinkangjia Model

Although there is currently no official agency that has formally recognized the illegal nature of Xinkangjia, based on existing information, its operating model is likely to involve organizing and leading pyramid scheme activities or illegal fundraising crimes (especially fundraising fraud crimes).

From the perspective of judicial practice, if classified as illegal fundraising, there will be a huge workload, including counting, contacting, and returning funds to about 2 million investors. However, if classified as a pyramid scheme crime, the processing procedure may be simplified, as current judicial practice tends to recognize that there are no victims in pyramid scheme cases, and the funds involved are usually confiscated and returned to the national treasury.

Can investors recover their funds?

Unfortunately, based on the current judicial practices in mainland China, it is very difficult to return funds related to pyramid scheme crimes to investors. The main reasons include:

1. The funds involved are often regarded as "illegal income" and are subject to seizure, freezing, and confiscation according to the law, ultimately being turned over to the national treasury.

2. Judicial authorities prioritize combating crime and maintaining financial order, and their attitude towards the so-called "returning funds to investors" is generally cautious.

3. Many pyramid schemes quickly transfer funds abroad or launder money through Virtual Money, making it extremely difficult to recover assets.

Nevertheless, there are still a few cases in judicial practice where investors are refunded. However, these cases do not fully represent the direction of future trials of pyramid scheme crimes, as China is not a common law country, and the current judicial practice still primarily focuses on confiscation.

Special Legal Risks of USDT Investment

The special aspect of the Xinkangjia case is that investors use USDT for investment. However, this practice carries many risks in the legal environment of mainland China:

1. Virtual Money does not have legal tender status, and its transactions are not protected under the Chinese legal system.

2. Although some judgments recognize that Virtual Money has certain "property attributes", this mainly applies to the scope of criminal law and does not mean support for its trading or investment.

3. Even if the assets involved are virtual money such as USDT, the public security authorities will still freeze and seize them according to the law, and confiscate them as illegal gains after a conviction.

Prevention Suggestions

In the face of the temptation of Virtual Money investment, investors should remain vigilant:

• Reject promises of "guaranteed profits without losses"
• Stay away from "referral" and "commission dividend" models
• Do not trust "investment experts" or "financial teachers" online.
• Report suspicious platforms to the public security organs in a timely manner.

Investment requires caution, compliance is paramount. Every investor should be vigilant, safeguard their own money, and avoid falling into various investment traps.