- Shenzhen authorities have warned that scammers are using stablecoins and digital asset jargon to defraud investors
- Officials have linked such activity to illegal fundraising, money laundering, and pyramid schemes
- The public has been urged to report suspicious activity and avoid believing exaggerated investment promises
Shenzhen’s financial regulators have issued a stark warning against illegal fundraising schemes disguised as stablecoin or digital asset investments. Authorities say fraudulent outfits are exploiting buzzwords like “financial innovation” and “digital assets” to lure the public into speculative ventures that often lead to gambling, pyramid schemes, or outright fraud. The city’s task force has reminded citizens that any such organization operating without national financial oversight is breaking the law, with the warning coming after e-commerce giant JD.com warned of fake coin promotions.
Crackdown on Illicit Fundraising
The warning comes from the Office of Shenzhen’s Municipal Task Force for Preventing and Combating Illegal Financial Activities. In a public statement, the task force noted that criminals are “taking advantage of the public’s lack of understanding of stablecoins” and using misleading investment pitches to “absorb funds by issuing so-called ‘virtual currencies,’ ‘virtual assets,’ or ‘digital assets.’” These schemes, the office said, not only disrupt financial order but “seriously endanger the property safety of the public.”
The statement emphasized that legitimate fundraising must be approved by national financial regulators and that any public solicitation of funds without such approval is considered illegal. “Such institutions use new concepts such as stablecoins to hype… publicly falsely advertise and absorb public funds,” the notice warned. It also warned of an uptick in such crimes recently, with pig-butchering scams also notably on the rise.
Public Urged to Stay Vigilant
Officials urged citizens to remain rational, skeptical of unrealistic promises, and better informed about the risks of unregulated digital investments. “Please strengthen the awareness of rational investment… and effectively improve risk awareness to avoid being deceived,” the statement said.
Under China’s “Regulations on Preventing and Dealing with Illegal Fund Raising,” any losses from participation in these schemes are to be borne by the investors themselves. Citizens are encouraged to report suspected scams to their local financial authorities or police departments, with the promise that verified tips will be “rewarded according to regulations.”
