Market regulators in Beijing's Haidian District have fined a technology outsourcing company 930,000 yuan ($130,000) for providing technical and operational support to an illegal blockchain-based pyramid scheme, marking the city's first administrative enforcement action against a third-party IT vendor assisting crypto multi-level marketing.
According to a report published by the Beijing News, the unnamed technology contractor provided routine system maintenance, promotional marketing, public relations, and exchange integration for a public blockchain network. The underlying blockchain project operated recruitment-driven rebate schemes dubbed the "Atom Plan" and "Hathaway Plan," which required participants to invest capital and recruit new members to earn financial rewards.
Regulators determined that the tech vendor knowingly facilitated the illegal operations by maintaining the software infrastructure and trading channel access that enabled the scheme's fund flows and user expansion. Public security authorities have criminally detained the core organizers of the pyramid scheme, while market supervision officials penalized the IT contractor under Article 26 of China's Regulations on the Prohibition of Pyramid Sales for aiding illegal operations.
The case represents a precedent in China's "prosecutorial-administrative referral" enforcement model, which pairs criminal prosecution of primary scheme leaders with administrative fines for peripheral service providers. Municipal officials noted that modern online pyramid schemes have increasingly shifted away from physical venues, using smart contracts, virtual currencies, and outsourced tech providers to mask transaction trails and expand across regional jurisdictions.
Haidian district market authorities cautioned digital technology vendors to perform strict compliance reviews before onboarding clients, warning that third-party developers will face direct legal liability if they build, maintain, or promote software platforms used for unauthorized financial operations or multi-level marketing schemes.
