China Cracks Down On Rip-Off ICOs Scamming Investors

0
75

Chinese regulators are warning cryptocurrency investors that scammers are ripping them off with bogus initial coin offerings that are hiding Ponzi schemes.

Led by the People’s Bank of China, financial watchdogs have spoken out about ‘lawless elements’ claiming the ICOs look like initial fork offerings, initial exchange offerings and initial miner offerings that are really fraud.

The crooks dress up their schemes with seductive terms like ‘financial innovation’ and ‘blockchain’ that are illegal fund-raising pyramid schemes, says the warning from the regulators.

“Some individuals claim to have obtained investment quotas for overseas premium blockchain projects in the chat group, which can be used for investment, and is most likely a fraudulent activity,” say the regulators.

“The funds for these illegal activities are mostly overseas, and supervision and tracking are very difficult.”

Great Firewall of China extended

The statement also blasted criminals offering free cryptocurrency and celebrity endorsements to attract investors.

“The schemes offer high returns and low risk, with strong deception” the notice said. “In practice, the criminals illegally profited from the so-called virtual currency price movements, setting profit and cash withdrawal thresholds.”

The Chinese government banned ICOs a year ago, but are still battling with operators trying to skirt the ban from overseas.

To help official bodies and businesses, the government has also set up a cryptocurrency evaluation service ranking proven schemes.

To crack down further on the crooks, the government is also set to extend a firewall to block online access more than 120 overseas cryptocurrency exchanges and web sites.

Worries over fake celebrity endorsements

The moves are thought to be paving the way for a government-controlled Chinese cryptocurrency by banning access to other coins.

The joint statement came from central bank the People’s Bank of China, the Ministry of Public Security, the Banking Regulatory Commission, the General Administration of Market Supervision and the Central Network Information Office.

The warning reveals that ICO fund raisers are resorting to renting overseas servers to promote blockchain projects advertised through chat rooms, foreign exchanges, electronic wallets and payment gateways.

Social media sites worldwide are struggling to ban ICOs and fake cryptocurrency celebrity endorsements, with Facebook, Google and Twitter blocking advertisements aimed at raising money.

Leave a Reply