In the midst of a countrywide clampdown on cryptocurrency, the central bank of China, together with other government agencies, issued a warning on recent criminal activities to alert the public against fake claims. The warning states that some financial companies are duping people by using buzzwords like “blockchain” to raise funds by issuing “virtual currency.”
Chinese Agencies Warn the Public to Stay Safe From Ponzi Schemes
The aim of The People’s Bank of China, together with the China Banking Regulatory Commission, Ministry of Public Security, Central Network Information Office and General Administration of Market Supervision, is to alert the public against fraud or fake promises. Companies are reportedly drawing retail investors into Ponzi schemes, which are schemes in which new investors are enticed in and pay profits to previous investors.
According to the Financial Times, in a recent joint statement issued by the government agencies, they said that the investment schemes of many fraudulent companies are not based on blockchain technology, despite their claims. The report was added to The People’s Bank of China’s official website. The statement warns investors to be careful while using the Internet or chat tools for investing or trading.
Tracking The Fraudsters Is Difficult
The joint statement suggests that tracking down the fraudsters involved with these scams is extremely difficult as the funds are mainly held overseas. The statement encourages investors to be rational towards investments in blockchain-based businesses and suggests that claims such as “the value of the currency only rises” or promises such as “high returns and low risk” are characteristic of fraud.
China Shuns Cryptocurrency Once Again: Warns Investors About Promises of “High Returns and Low Risk” was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.