On July 7, 2023, the Shenzhen Municipal Task Force Office for Preventing and Combating Illegal Financial Activities issued a strong warning regarding risks associated with stablecoins and digital assets.
Government Issues Warning on Stablecoin Scams
The Shenzhen government discovered that shady groups and fake investment schemes are deceiving people by using 'financial innovation' and 'digital assets' as bait for investors. These illegal groups are inducing citizens to participate in risky trading and are attempting to disrupt the financial system.
Protection Measures Recommended by Authorities
Shenzhen authorities strongly urged citizens to exercise caution and conduct due diligence on any investment opportunities. They also encouraged the public to report illegal organizations and fundraising schemes under the guise of stablecoins to the appropriate city or district departments. The task force stated: > "Relevant departments will verify reported clues, crack down according to the law, and informants may receive rewards based on regulations."
Importance of Legal Compliance in China
China has already banned cryptocurrency in the country due to government distrust of projects operating outside state control. The country has strict rules against illegal fundraising, and investors losing money in such scams are legally responsible for their losses. The Shenzhen government emphasizes the importance of adhering to these strict regulations.
These fraudulent schemes in cryptocurrency have made the government particularly cautious, as China has already banned cryptocurrency in favor of promoting its state-backed digital currency, the digital yuan, and unregulated stablecoin schemes will not be tolerated.
