Thai police have arrested four executives of UFun Store Co. Ltd., a business that operates an alleged pyramid scheme.
The company has reportedly made some 14,700 victims from Thailand, Malaysia and Indonesia, with an estimate of 10 billion baht (US$307 million) in possible damages, reported local media outlet Bangkok Post.
The four individuals are charged with collaborating in fraudulent borrowings and were arrested on Saturday, following several complaints from discontented members who had not received their promised profit since 2014. Police chief Somyot Poompanmoung said:
"We looked into its business and found it was in fact a pyramid scheme. We revoked its corporate licence on April 8 and sought eight arrest warrants for its shareholders and directors, three of whom are Thai."
UFun, which essentially operates an e-commerce website, made money by persuading people to contribute to various investment plans that varied in cost from US$500 to US$50,000.
Members were also asked to persuade others to join by buying UToken, a virtual currency issued by the company and used to buy products on its website.
"We found the company did not mention products it registered to sell in its sales pitches. Instead, it urged clients to expand their teams by offering in return high-value items such as cars or gold bars. That way, the money it made mainly came from new members rather than from selling the products."
The police seized money transfer slips of hundreds of thousands of baht each, banknotes, luxury cards, brand-name bags and around 40 luxury watches from the suspects. Thailand's Anti-Money Laundering Office also seized 250 million baht (US$1.67 million) of the company's assets.
The suspects included Rittidej Warong, a lawyer by profession and police-sub lieutenant, who holds 51% of the company.
Other suspects on arrest warrants are three Malaysians — Tae Kim Leng, Lee Kuan Ming and Wong Ching Hua — and a Thai, Arthit Pankaew. The four are believed to be the masterminds of the scheme, according to assistant police chief Suvira Songmetta, who led the raid on Saturday morning.
Surfing on the crypto buzz
UToken, a digital medium of exchange created by UFun that "provides investment growth opportunity," is allegedly issued by UToken Reserve Limited, "a group of established international body representative[s] from the Internet Technology, Business, Banking, Investors and Networking Industries," according to the website.
UToken currently has six committee members from Thailand, Malaysia, South Korea, Vietnam and Guinea, with six bureaus throughout Southeast Asia, and the committee is looking to expand.
A history of Utoken suggests that the digital token was founded in Hong Kong in 2013, and has created plenty of affiliated products and services throughout its existence, including UBonuss, UBarter, UFun Gold and UToken Mutual Fund.
The company allegedly signed a joint venture for development of a project called Bangkok Marina Resort and Spa.
Bina Puri Holdings, a construction company that was collaborating to develop the property in Bangkok, issued a "letter of protest" to UFun Group Ltd. in July 2014, asking the company to "refrain from informing all your customers that our Company is your joint venture partner for the 'UToken' promotion."
"We do not participate in any of your promotions for 'UToken,' and we are at no material times your joint ventures partners for the 'Utokens,' which you or your related Companies are promoting. [...] Please take notice that we are only collaborating to develop a Property in Bangkok, Thailand under the Project name of 'Bangkok Marina Resort & SPA' [...] Please note that there is no Partnership being created."
UToken Reserve claims to have signed a strategic agreement with UDBP Bank, BDG Bank SA and Nico Financial in March 2014 to launch a payment settlement via UDBP card system, resulting in a US$10 million transfer to BDG Bank.
An English non-official presentation of UToken mentions Bitcoin's success stories, its growth and millionaires, before pitching that "UToken growth is much faster than Bitcoin," and that unlike the cryptocurrency, UToken "has a main office/management/global offices."
While local authorities are cracking down on UToken and the so-called UFun Club, other crooked projects might be in development as well. These products are similar in the way that they all surf on the Bitcoin buzz to lure people to "invest" money into some alleged lucrative plan.
"If you really understand Bitcoin and crytocurrencies, you could see how scammy UToken was," David Moskowitz, founder of Coin Republic, a bitcoin brokering and consulting business based in Singapore, told Cointelegraph:
"Promising returns, pushing for the recruitment of new members, and a supposed bank in Africa backing them were all red flags to me. Unfortunately, due to libel laws in Singapore, I couldn't make that statement publicly. I'm glad the Thailand authorities shut it down before it got popular here."
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