Chinese Regulators Combat Deceptive Crypto Scams

Chinese financial regulators have issued a stern cautionary message regarding the proliferation of deceptive fundraising schemes camouflaged as crypto and 'Yuanverse' metaverse investment opportunities. Collaborating closely with the Dalian Supervision Bureau, regulatory bodies are actively addressing the rise of illicit financial practices threatening the public.

Recent investigations have unveiled a disturbing trend wherein criminals exploit terms like "virtual currency," "Yuanverse," and "wealth sharing" to perpetrate fraudulent activities. These schemes, conducted both online through platforms like WeChat groups and offline via seminars nationwide, lure unsuspecting individuals into downloading illicit apps and investing in illegal virtual currencies under false promises of wealth accumulation.

Such actions are suspected of violating laws governing fundraising, fraud, and other criminal activities, endangering investors' financial security and disrupting economic stability. To combat these scams effectively, authorities have reiterated key points of existing regulations.

In September 2017, seven governmental departments, including the People’s Bank of China, issued a joint statement unequivocally banning token issuance financing activities, considering them unauthorized and associated with various illegal practices. Likewise, in May 2021, major industry associations emphasized the lack of legal protection for virtual currency transactions, making participants fully accountable for any resulting losses.

Building upon prior regulatory efforts, a comprehensive notice issued in September 2021 by ten governmental departments clarified the legal framework governing virtual currency transactions. It highlighted the illegality of activities such as token issuance financing and virtual currency exchange, emphasizing the invalidity of civil legal actions resulting from investments in virtual currency contrary to public order and customs.

In line with Article 25 of the Regulations on Preventing and Dealing with Illegal Fund-raising, individuals engaging in illegal fundraising schemes bear sole responsibility for incurred losses. The public is urged to exercise caution, enhance risk awareness, and adhere to sound investment principles, refraining from speculative trading and illicit financial activities to protect personal assets.

This warning underscores the collective resolve to combat illegal fundraising, safeguard financial integrity, and uphold investor interests. As regulatory authorities intensify efforts to maintain financial stability, individuals are encouraged to stay informed and vigilant, contributing to a more secure economic environment.