On February 13, 2018, defendants Ding Mouzhong and others registered and established a cloud digital commodity company, and successively established affiliated companies such as a wealthy commodity company to provide service support for a cloud digital commodity company. Ding Mouzhong and others developed a digital e-commerce shopping platform APP, adopted the method of "pulling people with old and new" and hierarchical incentives to publicly publicize the development of digital consumer members to the society, deliberately raised the sales of goods to produce a high price difference, and carried out the so-called "consumption rebate" to consumer members, and then used virtual currency investment as a gimmick, through artificial manipulation and false publicity packaging to create a virtual currency "Yunyuan" (not a digital virtual currency generated based on algorithms), inducing consumer members to "consumption rebates." "Investing in the purchase of "Yunyuan" is a disguised open absorption of funds to the public. According to the audit, from May 1, 2020 to June 8, 2021, a cloud digital app platform attracted 477 720 consumer members across the country to purchase 113 933 646 pieces of "Yunyuan", with a total sales amount of RMB 300 850 885$6. The above-mentioned consumer members purchased goods and invested in "Yunyuan" on a cloud digital app platform, and all the payments were made into the accounts of affiliated companies actually controlled by Ding Mouzhong and others, such as a wealthy commodity company.
It was also ascertained that on February 23, 2021, the Yunmeng County Public Security Bureau of Hubei Province filed a case for investigation. On November 16, 2021, the Market Supervision and Administration Bureau of a district in G City issued an administrative penalty decision, finding that a cloud digital commodity company and a wealthy commodity company violated the provisions of Article 7 (1) and (2) of the "Regulations on the Prohibition of Pyramid Selling", and was an illegal act of organizing and planning pyramid schemes, and fined a cloud digital commodity company 2 million yuan, a fine of 2 million yuan to a wealthy commodity company, and 299 995 918 to a cloud digital commodity company and a wealthy commodity company$97 was confiscated.
Judgment result: On August 19, 2022, the People's Court of Yunmeng County, Hubei Province, with the (2022) E 0923 Xingchu No. 153 Criminal Judgment, found that the defendant Ding Mouzhong committed the crime of illegally absorbing public deposits, and sentenced him to 13 years imprisonment and a fine of 1 million yuan; Defendant Ren Mouhong committed the crime of illegally absorbing public deposits and was sentenced to 11 years and six months imprisonment and a fine of 800,000 yuan; Defendant Xu Mouyan committed the crime of illegally absorbing public deposits and was sentenced to 11 years and six months imprisonment and a fine of 800,000 yuan; Defendant Song was sentenced to 11 years and six months imprisonment and a fine of 800,000 yuan for the crime of illegally absorbing public deposits; Defendant Kang Mouwei committed the crime of illegally absorbing public deposits and was sentenced to seven years imprisonment and a fine of 600,000 yuan; Defendant Wang Mouting committed the crime of illegally absorbing public deposits and was sentenced to nine years imprisonment and a fine of 600,000 yuan. The funds and fruits illegally absorbed by the defendant are to be recovered in accordance with law. The assets seized or frozen by the public security organs as a result of the case are to be recovered by the public security organs in accordance with law and returned to the fundraising participants in proportion, and the insufficient part shall continue to be recovered, and the remaining part after the recovered assets are returned to the fundraising participants shall be handed over to the state treasury.
After the verdict was announced, defendants Ding Mouzhong and others were not satisfied and appealed. On October 28, 2022, the Intermediate People's Court of Xiaogan City, Hubei Province, issued the Criminal Ruling (2022) E 09 Xingzhong No. 175 of the Court of Second Instance, rejecting the appeal and upholding the original judgment.
Reasons for the adjudication: The effective judgment of the court held that the defendant Ding Mouzhong and others clearly knew that a cloud digital commodity company did not have the qualifications to publicly absorb public funds, violated national financial management regulations, and publicly publicized and promoted through promotion meetings, online **, reports, and "using old people to attract new people", and publicly absorbed funds from the public by investing in the virtual currency "Yunyuan" to achieve capital preservation and appreciation, which is an illegal absorption of public funds by means of virtual currency transactions, constituting the crime of illegally absorbing public deposits. A cloud digital commodity company, a wealthy commodity company in Shandong, and a film and television culture media company in Qinhuangdao are all fund channel platforms actually controlled by Ding Mouzhong and others for illegally absorbing public deposits, and the Yunmeng County Public Security Bureau in Hubei Province seized and froze a total of 235 302 395 funds in the accounts of the aforementioned companies15 yuan and its fruits shall be all recognized as illegal gains from the crime of illegally absorbing public deposits in accordance with law. In accordance with the provisions of Article 64 of the Criminal Law of the People's Republic of China, the above-mentioned illegally obtained funds shall be returned to the fundraising participants, and the insufficient part shall be returned by Ding Mouzhong and others.
*: People's Court Case Database.