China Warns Against Illegal Fundraising Scams Posing as Crypto and Yuanverse Investments
In Brief
China’s financial regulators warned against illegal fundraising scams disguised as crypto and ‘Yuanverse’ metaverse investment schemes.
In a concerted effort to curb illicit financial activities, China’s financial regulatory agencies, in collaboration with the Dalian Supervision Bureau, have issued a stark warning to the public regarding the proliferation of illegal fund-raising schemes operating under the deceptive guises of “virtual currency“, “Yuanverse” and “wealth sharing.”
According to the announcement, recent investigations have uncovered a troubling trend wherein criminals leverage these enticing terms to orchestrate fraudulent schemes, posing significant threats to investors’ financial security and undermining economic and financial stability.
It added that these nefarious activities have been observed online, mainly through the establishment of WeChat groups, and offline via nationwide seminars. In these forums, individuals are misled into downloading illicit applications and purchasing illegal virtual currencies under the pretense of “sharing wealth and business opportunities.”
Such actions are suspected of constituting illegal fund-raising, fraud, and other illicit and criminal activities, thereby endangering individuals’ property safety and disrupting the orderly functioning of economic and financial systems.
To address such concerning scams, authorities have underscored several vital points. The authorities mentioned that in September 2017, a joint announcement by seven governmental departments, including the People’s Bank of China, unequivocally prohibited all token issuance financing activities. Such activities were deemed unauthorized forms of financing and were associated with illegal sales of tokens, issuance of securities, fund-raising violations, financial fraud, and pyramid schemes.
Similarly, in May 2021, prominent industry associations, including the China Internet Finance Association, the China Banking Association, and the China Payment and Clearing Association, jointly issued an announcement emphasizing the absence of legal protection for virtual currency transaction contracts. Consequently, parties engaging in such transactions bear full responsibility for any ensuing consequences and losses.
Authorities Clarify Legal Framework for Virtual Currency Transactions
Building upon previous regulatory initiatives, a comprehensive notice was issued in September 2021 by ten governmental departments, including the People’s Bank of China and the Supreme People’s Court. This notice clarified the legal framework governing virtual currency transactions, highlighting the illegality of various activities including token issuance financing, virtual currency exchange, and related derivatives transactions. Moreover, it reiterated the invalidity of civil legal actions resulting from investments in virtual currency that contravene public order and customs, with resulting losses borne by the involved parties.
According to Article 25 of the Regulations on Preventing and Dealing with Illegal Fund-raising, participants in illegal fund-raising schemes are solely responsible for any losses incurred. In light of these regulatory measures, the public is urged to exercise vigilance, enhance risk prevention awareness, and foster sound investment principles. Individuals are advised to refrain from speculative “virtual currency” trading, illegal fund-raising, and other illicit financial activities to safeguard personal assets.
This warning serves as a clarion call for heightened vigilance and underscores the collective commitment to combating illegal fund-raising activities, thereby preserving financial integrity and protecting the interests of investors. As regulatory authorities intensify efforts to uphold financial stability, individuals are encouraged to remain informed and alert, contributing to a more secure and transparent economic landscape.
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Kumar is an experienced Tech Journalist with a specialization in the dynamic intersections of AI/ML, marketing technology, and emerging fields such as crypto, blockchain, and NFTs. With over 3 years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and delivering comprehensive insights. Kumar's expertise lies in producing high-impact content, including articles, reports, and research publications for prominent industry platforms. With a unique skill set that combines technical knowledge and storytelling, Kumar excels at communicating complex technological concepts to diverse audiences in a clear and engaging manner.
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Kumar is an experienced Tech Journalist with a specialization in the dynamic intersections of AI/ML, marketing technology, and emerging fields such as crypto, blockchain, and NFTs. With over 3 years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and delivering comprehensive insights. Kumar's expertise lies in producing high-impact content, including articles, reports, and research publications for prominent industry platforms. With a unique skill set that combines technical knowledge and storytelling, Kumar excels at communicating complex technological concepts to diverse audiences in a clear and engaging manner.
