Shenzhen, a technology hub in southern China, issued an official warning against investment scams disguising as illegal financial operations.
Scams Related to Stablecoin Investments
The warning from the city’s Special Task Force on Preventing and Combating Illegal Financial Activities highlighted that projects using attractive phrases like 'financial innovation' and 'cryptocurrency' are actually facilitating crimes such as fraud, gambling, pyramid schemes, and money laundering. Authorities pointed out that the public’s limited knowledge of stablecoins is being exploited to gather funds through misleading promotions.
Local Authorities' Warnings
The warning emphasized the so-called altcoin projects marketed with promises of stable value, featuring slogans of high returns and low risk, even attempting to build trust through fake global licenses. The official notice advised against transferring funds without meticulously examining project documents and verifying the legal compliance certificates of the investment platforms.
Regulatory Measures in the Region
This warning followed statements by People’s Bank of China Governor Pan Gongsheng recognizing stablecoins’ impact on transforming global payment infrastructure. With Hong Kong taking the lead in regional regulation by mandating licenses for stablecoin issuers in a law enacted in May, Shenzhen’s notice aims to inform the public and prevent potential victimization, as cryptocurrency transactions remain illegal on the Chinese mainland.
Thus, Shenzhen's warning emphasizes the importance of caution in cryptocurrency investments and the necessity of verifying information before engaging in financial transactions.
