PI coin (Pi Network, hereinafter referred to as "Pi coin") should be the hottest currency in the Chinese currency circle these days, and the majority of grandpa and aunt finally have a place in web3.
The reason is that Euro-Italian Exchange announced on its official website and X platform that it would launch PI coin (Pi Network, hereinafter referred to as "Pi coin") on the 20th of this month.
Subsequently, Bitget also announced on the official account of the X platform that it would launch Picoin on the 20th of this month. Some netizens said that the Matcha Exchange also announced that it would launch Picoin.
It is not uncommon for one or two exchanges to list new coins, but why is Pi coin so unique among the coin group? Because some people call Pi coin "the first belief coin in the universe, the king of local promotion, the coin that must be bought by uncles and aunts all over the world, the coin that has been mentioned many times by the Chinese police..." How can such a halo not be dazzling.
1. Introduction to Picoin
According to public information, Pi Network is claimed to be initiated by Stanford University alumni Dr. Nicolas Kokkalis and Dr. Chengdiao Fan in 2018. The total issuance of Pi coins is 100 billion. People can participate in mining by downloading the APP on their mobile phones. It has not yet been fully developed.
(Pi White Paper released on the official website of Picoin)
The official website of Picoin has published the "Pi White Paper" which details the Picoin project. The general idea is that Pi Network will create a diversified application ecosystem covering payment, transfer, shopping, investment, etc. Participants are required to undergo KYC certification.
According to the analysis of some bloggers on X, Picoin is currently mainly circulated in Southeast Asia. In China, it is mostly promoted through offline marketing. The audience is mostly middle-aged and elderly people. These people do not have basic knowledge of blockchain or virtual currency. They are just told that they can make money by mining Picoin and wait for it to appreciate in the future. Some promotion agents even promote Picoin as the only cryptocurrency that can surpass Bitcoin in the future. Participants need to install the Picoin APP on their mobile phones to mine, and can also invite offline users through invitation codes to speed up their mining speed.
In reality, the promotion of Picoin is quite down-to-earth. Lawyer Liu collected some of them from the Internet:
(Picture from the Internet, please delete if infringed)
(Picture from the Internet, please delete if infringed)
2. Is Pi coin a pyramid scheme coin?
Many people have consulted Lawyer Liu about the legality of Picoin. Since Lawyer Liu has never mined Picoin and has encountered too many virtual currency CX disks of this type, he has not spent any time to study the model of Picoin. It was not until today that he downloaded the Picoin APP. After experiencing the promotion method of Picoin, Lawyer Liu judged that the current model of Picoin is very likely to constitute a pyramid scheme crime under Chinese criminal law . The specific analysis is as follows:
1. The Constitution of MLM Crimes under Chinese Law
The definition of pyramid scheme crime (organizing and leading pyramid scheme activities) in China's Criminal Law is: the person who plays the role of organizer and leader requires participants to pay fees or purchase goods and services to obtain membership qualifications in the name of business activities such as selling goods or providing services, and forms a hierarchy in a certain order, directly or indirectly uses the number of recruited personnel as the basis for remuneration or rebates, and induces or coerces participants to continue to recruit others to participate, and defrauds property . According to the provisions of the judicial interpretation, pyramid scheme activities that constitute criminal offenses require that there are more than 30 people participating in the pyramid scheme activities within the organization and the hierarchy is more than three levels.
In simple terms, pyramid scheme crimes have the following characteristics:
First, the criminal law only punishes the organization and leaders (and their accomplices, such as key employees);
The second criminal mode is to require members to pass certain conditions to obtain membership qualifications under the guise of business activities;
Third, the number of members must be more than 30 and must include at least three levels, and the development of downlines must be used directly or indirectly as the basis for compensation or rebates;
Fourth, the fundamental purpose is to defraud others of their property.
For other pyramid selling activities that do not meet the above conditions, the relevant authorities generally handle them with administrative penalties.
For further analysis of cryptocurrency pyramid schemes, please refer to Liu Lu’s previous article:
(II) Reasons why Picoin may be a pyramid scheme
According to the information currently available, Pi Coin has no real project to rely on, and relies entirely on a preset future prospect to attract the public to participate in mining; Pi Coin has an invitation mechanism to form a hierarchical relationship, and the inviter can obtain actual benefits (accelerate their own mining) by "recruiting people"; whether Pi Coin defrauds others of their property is the essential feature of determining whether it constitutes a pyramid scheme crime. At present, if all others are invited to participate in mining by downloading the APP on their mobile phones, and mainstream virtual currencies such as USDT are not absorbed as a pool to add liquidity, it cannot be said that Pi Coin is definitely a pyramid scheme coin.
However, there is a very realistic problem now. Once Pi coin is listed on the exchange and opens secondary market trading and mutual trading between ordinary participants (retail investors), the promotion and development of Pi coin will inevitably be linked to mainstream currencies and even legal tender. This gives judicial authorities the confidence and motivation to determine that the organizers, leaders, and promoters of Pi coin have committed pyramid scheme crimes.
As early as July 2023, the Public Security Bureau of Hengyang City, Hunan Province, stated on its official website that Picoin is a scam. Of course, from the perspective of criminal defense lawyers, in theory, only the courts in my country can determine whether a certain behavior constitutes a crime, but in practice, such a statement by the public security department must indicate that Picoin is extremely risky for criminal offenses in mainland my country.
3. Are there any legal risks in buying and selling Pi coins?
If you have Pi coins now and want to sell them at a high price after the exchange goes online; or buy Pi coins when they are publicly traded and wait for the price to go up, will there be legal risks?
Of course there are, but there are two situations:
First, if Picoin is only bought and sold on exchanges or between individuals, there is no risk of criminal offense in principle. However, virtual currency investment is not protected by Chinese law. If Picoin collapses in the future, investors will not be able to seek civil and commercial legal remedies in mainland China.
The second is to obtain distributed coins for sale by developing downlines. Once the downline levels exceed three (including three), it is considered a pyramid scheme organization, leader, or accomplice under Chinese criminal law; generally, they will be sentenced to fixed-term imprisonment of not more than five years and a fine; once the amount involved exceeds RMB 2.5 million or the number of people developed exceeds 120, they will be sentenced to fixed-term imprisonment of more than five years and a fine.
In addition, there are no victims in pyramid schemes. If the Pi Coin is treated as a pyramid scheme by mainland judicial authorities in the future, the uncles and aunts will not receive any compensation, and all the property involved in the case will be confiscated and returned to the state treasury.
Therefore, be cautious when speculating in Pi coin ( that is, don’t speculate ).
4. Final Thoughts
A year ago, someone consulted me about legal issues related to Picoin and said that I could use Picoin to pay for the consultation fee. At the same time, he also gave me a general introduction to Picoin (see the picture below):
However, I was very pessimistic about Pi at that time (and I still am not optimistic about it now). Now when I see someone post the following picture on WeChat Moments, I really feel the incompatibility of human joy.
I would like to say to exchanges like Ouyi that I personally believe that launching coin distribution online is an evil act . I hope that the compliance team of the exchange will carefully study the laws and regulations of mainland China and give some reliable suggestions to the decision-makers. Of course, if this is what the leaders have decided to do, or if these exchanges no longer care about the mainland Chinese market, then I take back this statement ( this is an evil act ).
We are waiting for the performance of the coin distribution on the 20th. It is really hard to predict whether it will be a blessing or a curse for all coin holders. But one thing is certain, whether it is sad or happy, Lawyer Liu will definitely provide you with stable legal services here.
