“REC Golden Tree” was an online pyramid scheme that once operated in China. Its promotional model typically required participants to pay membership fees at different levels (for example, $500 to become a 1-star member, up to $100,000 to become a 6-star member), promising returns of more than 10 times the principal after two years,along with monthly dynamic returns. The larger the investment, the higher the corresponding rate of return.The project claimed that investors’ funds were used to cultivate medical cannabis or were linked to “REC Virtual Currency,” and stated that its parent company was the “REC Consortium,” a global alternative asset management and industrial investment firm established in 1998 with its Asia-Pacific investment headquarters in Jakarta, Indonesia.
Is the “REC Golden Tree” investment scheme legal in China?
The “REC Golden Tree” investment scheme is illegal in China.Chinese market regulatory authorities have classified it as an online pyramid scheme, and multiple cases have been investigated and cracked down on. For example, in 2019, the Market Regulation Bureau of Rui’an City, Zhejiang Province, investigated an “REC Golden Tree” online pyramid scheme case involving as much as 50 million yuan and more than 1,400 members.In March of the same year, public security authorities in Wanzhou, Chongqing, also dismantled an “REC Golden Tree” online pyramid scheme ring.
The project’s operating model exhibits clear characteristics of pyramid schemes and illegal fundraising:
- Promises of high returns: Promoting “low investment, high returns,” the scheme promised returns of more than 10 times the principal within two years, along with monthly dynamic returns. Such rates of return, which far exceed normal investment logic, are typical characteristics of a scam.
- Downline recruitment model: Profits were generated by recruiting others to join and pay membership fees, creating a hierarchical structure that fits the definition of a pyramid scheme.
- Pyramid scheme nature: A model offering annual profits as high as 10 times the principal and a payback period of about one month is, in essence, a “hot potato” pyramid scheme. Once there is insufficient capital injected by new members in later stages, the capital chain will break, causing investors to lose their entire investment.
- Link to Virtual Currency: “REC Golden Tree” was also formerly known as “Virtual Currency REC” and is labeled as “virtual currency” on Tencent’s Lingkun Financial Risk Supervision Platform, with a prominent warning stating that “investing in virtual currencies carries very high risks.”
- Links to Projects Such as “Yang Laoban”: Investigations have revealed that “REC Golden Tree” is closely linked to projects such as “Yang Laoban” and “Hamp,” all of which have been identified as Ponzi scheme pyramid scams.
Chinese law explicitly prohibits pyramid schemes and illegal fundraising activities. Any so-called “wealth management” or “investment” project conducted within China that uses “low investment, high returns” as bait—through methods such as recruiting downlines and collecting entry fees—will be severely punished by law if it meets the criteria for a pyramid scheme or illegal fundraising.Investors should be vigilant against such risks, avoid participating in illegal financial activities, and protect their own financial security.
