Chinese police authorities have busted a pyramid scheme that disguised itself as a blockchain project, China Money Network reported citing local news sources.

A gang of over 10 suspects has been arrested by the police in Jinan, Shangdong province. They were reportedly involved in an RMB300 (US$46.8 million) million pyramid scheme.

The suspects founded an e-commerce platform in 2017 and lured investors by offering attractive membership rebate programs. They told potential investors that by paying different levels of membership fees they would be able to obtain different amount of original shares and dividends of the blockchain-based peer-to-peer (p2p) platform.

According to police announcements, the gang set up a five-tier hierarchical rebate model from county agent to regional agent. Furthermore, the company claimed to be a ‘blockchain’ and ‘big data’ company to attract more investors. It also used some of the buzzwords coming from the government including "Western Development", "One Belt and One Road" and "Poverty Alleviation". A considerable number of victims from this pyramid scheme comprises of college students.

The number of cryptocurrency and blockchain scams is on the rise globally, with recent reports suggesting that China might be unfortunately leading the race.

China’s financial cybercrime cell, the National Internet Financial Risk Analysis Technology Platform (IFCERT), recently said that it has identified over 400 fraudulent digital currency schemes. Shenzhen police recently made arrests in a cryptocurrency fraud case that had attracted RMB307 million (US$48.2 million) from 3,000 people.

Police in Xi'An last month arrested the founders of a claimed cryptocurrency pyramid scheme that allegedly raised 86 million yuan ($13 million) from more than 13,000 people. More recently, Chinese prosecutors charged four suspects reportedly involved in an alleged $2 billion OneCoin cryptocurrency pyramid scheme.