$62 million in ETH, USDT, FIL were seized by Chinese police from a Filecoin miner Ponzi scheme

Chinese law enforcement authorities seized crypto assets worth 400 million yuan (~$62.5 million) in a crackdown on an alleged Filecoin miner Ponzi scheme.

Xuzhou city police have arrested 31 people for allegedly conducting Ponzi schemes, which are linked to a Shanghai-based Filecoin miner manufacturer IPFSUnion. The suspects were arrested in several cities including Shanghai, Wuhan and Shenzhen, but it is not clear whether they belong to IPFSUnion or the distributor involved.

Local police seized crypto assets including ETH, USDT, and FIL as part of the crackdown.

IPFSUnion said in a statement Friday itself that the suspects purchased the equipment with allegedly illegal money and that they were assisting police with the investigation. As a result, the company has now limited the number of miners in the data centers to the amount allowed by the police, and everything is restored only after the investigation is over.

IPFSUnion is one of the top 10 Filecoin miners by total effective storage capacity, and it also sells miners and computing power to end users directly or through distributors.

It remains unclear whether IPFSUnion is accused of being directly involved in a Ponzi scheme or knowingly allowing its distributors to oversell non-existent devices. But Filecoin-based Ponzi schemes have been rampant in China since 2018 after Protocol Labs raised $200 million in an ICO 2017.

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