On July 9, the Beijing Internet Finance Industry Association (BIFA) issued a notice urging retail investors to reject pitchbooks that envelop old-style pyramid sales in cryptographic terms.
According to Local news outletBIFA said the promoter has launched ads for “Stablecoin Wealth Plans,” “Web 3.0 Dividends,” and similar offers promises of fixed returns.
The circulation lists five characteristics of illegal funding. Unlicensed, amplifying information gaps using technical terms, issuing false assurances, recycling new deposits to pay previous participants, bridging them to fraud and money laundering.
BIFA has advised the public to verify the licenses of businesses through national regulators and to recognize that high returns often involve high risks.
It also reminds victims that China’s regulations regarding the prevention and disposal of illegal funding are responsible for investors for losses. The report highlighted that the warning was a total of nearly 1,500 kanji, and that it was the first appearance on BIFA’s verified WeChat channel.
Past fraud informs current rhetoric
Plustoken is a wallet service that collapsed in 2019 and has collected around 200,000 Bitcoin (BTC) and 9 million Ethereum (ETH).
This amount is worth over $4 billion at a price of 2020, making it one of the biggest Ponzi schemes using crypto buzzwords.
This episode showed how promoters move coins across exchanges and mixers before liquidation, pushing enforcement into a multi-year pursuit.
Notably, China banned direct crypto-to-crypto exchange services in 2021, but domestic interest will last through offshore platforms and grey market on-ramps.
Regulators in Beijing, Shanghai and Shenzhen have released at least one consumer notification this year with token scams.
Potential reasons for warning
As reported by Reuters, retail speculation is accelerating on mainland social platforms, with the unofficial “Stablecoin Concept” stock index rising 88% since April.
We also tracked Hong Kong’s school enquiries rules as market interest takes effect on August 1st.
There have also been reports that domestic blogs have begun to promote “USDT mining pools” and “insured CNH Stablecoins,” urging local regulators to prepare for enforcement action.
The BIFA statement concludes by publishing the hotline and encouraging investors identifying unauthorized activities to report to police or financial supervisors.
The association adds that it will forward credible tips to state task forces tracking illegal public funding.
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