Chinese authorities have warned against illegal fundraising schemes involving stablecoins and digital asset investments.
In a statement released on Monday, the Shenzhen Municipal Task Force Office for Preventing and Combating Illegal Financial Activities cautioned citizens against fraudulent schemes exploiting the hype around digital assets that target investors across the country.
Scammers exploit stablecoin popularity
“Recently, digital currencies represented by stablecoins have received widespread attention from the market,” the Task Force stated in its advisory. “Monitoring has found that some illegal institutions use ‘financial innovation’ and ‘digital assets’ as gimmicks… and absorb funds by issuing so-called ‘virtual currencies’, ‘virtual assets’, ‘digital assets’, etc.”
The statement warns that China’s national financial regulatory bodies do not authorise these operations, which, in many cases, breed criminal activity, including gambling, fraud, pyramid schemes, and money laundering.
The schemes often entice people with false promises of high returns, using false projects or fake trading platforms to gain public trust before stealing invested funds.
Authorities emphasised that participating in such schemes risks individuals’ finances and urged citizens to exercise caution.
“Please strengthen the awareness of rational investment, do not blindly believe in the exaggerated promises… and effectively improve risk awareness to avoid being deceived,” the notice read.
As a result, this warning is part of China’s efforts to curb illegal activities tied to cryptocurrency. In late 2023, Beijing launched joint operations with Southeast Asian countries, including Laos, Thailand, Vietnam, Myanmar, and the Philippines, which led to the repatriation of around 56,000 individuals involved in pig-butchering scams.
These scams, which have become a global threat, involve elaborate efforts by fraudsters to gain victims’ trust before convincing them to invest in fake cryptocurrency ventures.
The announcement directly ties such illicit fundraising operations to these criminal networks.
“Such institutions use new concepts such as stablecoins to hype… and breed illegal fundraising, gambling, fraud, pyramid schemes, money laundering and other illegal and criminal activities,” the statement declared.
Chinese citizens urged to report suspicious activity
The Task Force further urged anyone who encounters suspicious fundraising efforts involving stablecoins or digital asset investments to report them immediately.
“If you find that relevant institutions are engaged in illegal fundraising… please report it to the non-leading department of the city or district or the public security department in a timely manner,” the statement said, adding that informants will be duly compensated.
The public is reminded that the state will not cover losses incurred from illegal fundraising. As outlined in the national Regulations on Preventing and Dealing with Illegal Fundraising, individuals who fall victim to such scams will bear the consequences themselves.
With China doubling its zero-tolerance approach toward unauthorised crypto activity, the latest warning reinforces the government’s intent to protect citizens from cryptocurrency scams.