Unveiling "Xingkangjia": A Warning About a New Investment eyewash

Recently, "Xinkangjia" has become a hot topic on multiple social media platforms and investment chat groups. It is reported that the platform has been active since 2023, claiming to be the "China branch of the Dubai Gold Exchange". Initially, it attracted investors under the guise of crude oil futures investment, but later shifted focus to areas such as "big data investment", "foreign exchange investment", and "virtual currency investment". Participants are required to pay a threshold fee of 1000 USDT to become a member, and the platform adopts a "militarized" organizational structure, with a rebate mechanism between different levels.

On June 26 this year, the Xinkangjia platform fully closed its withdrawal channel. It is reported that approximately 2 million investors in the country were affected, with the amount involved reaching about 18 billion. There are also rumors that the involved funds were mixed and transferred in the form of USDT.

It is noteworthy that as early as April this year, the Dubai Gold and Commodity Exchange (DGCX) issued a statement clearly stating that DGCX has not established any affiliated institutions or partners in China. In addition, since 2024, several departments in mainland China have issued warnings regarding 鑫慷嘉.

The Crimes That May Be Involved in the Xinkangjia Model

Although there is currently no official agency that has formally reported whether Xinkangjia constitutes a crime, based on the analysis of existing information, the operating model of this platform is likely to involve the crime of organizing and leading pyramid selling activities or the crime of illegal fundraising (especially the crime of fundraising fraud).

From the perspective of judicial practice, if classified as illegal fundraising, it will face a huge workload, including the statistics, contacting, and returning funds to about 2 million investors. In addition, if the investment is in USDT, it is also necessary to consider whether to return USDT or to convert the virtual currency into RMB before returning it.

In contrast, if classified as a pyramid scheme crime, judicial authorities may tend to determine that there are no victims in the case, and all funds involved will be confiscated and returned to the national treasury. This approach can both enrich the finances and save judicial resources.

Handling of Investor Funds in Pyramid Scheme Crimes

Unfortunately, based on the current judicial practices in mainland China, there is very little chance that funds involved in pyramid scheme crimes will be returned to investors. The main reasons include:

1. The funds involved are mostly classified as "illegal gains".
2. Legal priority to protect the overall order of society
3. Serious asset loss, difficult to recover.

However, there are a few cases in judicial practice where investors have been refunded. For example, in certain pyramid scheme cases, the court explicitly pointed out that ordinary investors are victims of the case and that the corresponding property should be returned. However, these types of precedents do not fully represent the trial standards for new pyramid scheme criminal cases, as current judicial practice still primarily focuses on confiscation.

Legal Risks of USDT Investment

The special aspect of the Xinkangjia case is that investors all deposited funds in USDT. However, in the current judicial environment in mainland China, such investment behavior carries numerous legal risks:

1. Virtual currencies do not have legal tender status and transactions are not protected by law.
2. Acknowledging the property attributes of virtual currency does not equate to supporting its trading.
3. The virtual currency assets involved may still be confiscated.

Beware of Virtual Currency "Financial Management" Eyewash

The "Xin Kang Jia" case reminds us once again that those virtual currency financial management projects that flaunt terms like "blockchain", "USDT", "mining machines", and "task platforms" may essentially be eyewash dressed in new clothing. These projects disguise themselves under the guise of "financial innovation", but are likely a combination of illegal fundraising, pyramid schemes, and fraud.

Currently, mainland China does not recognize the legal status of virtual currency investments and does not provide legal protection. This means that once an investment fails or a platform goes bankrupt, investors may not only suffer significant losses but may also bear legal responsibilities for "participating in pyramid schemes" or "aiding money laundering."

In the face of the temptation of virtual currencies and high returns, investors should remain vigilant:

• Beware of promises of "guaranteed profits"
• Stay away from "referral" and "commission sharing" models
• Do not easily trust "investment experts" or "financial teachers" online.
• Report suspicious platforms to the relevant authorities in a timely manner.

The law cannot protect non-compliant speculative behaviors. Investment should not only consider recovering costs but also timely reassessment. I hope every investor can remain rational, invest cautiously, and not pay for eyewash.