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Authorities in Shenzhen, China, warned citizens about illegal fundraising plans disguised as Stablecoin and cryptocurrency investments.
The Shenzhen Municipal Government Task Force issued an alert on Monday urging the public to be cautious about unlicensed entities that promote investment in digital assets.
Officials say the groups use public knowledge of stable people and limited crypto-related terms to mislead investors and fuel speculative investments.
They added that such organizations are often at the forefront of illegal actions in fundraising, online gambling, fraud, pyramid schemes and money laundering.
The task force said the groups were not authorized to raise funds from the public and warned citizens that the losses caused by these plans were unlikely to be reimbursed.
Under Chinese law, individuals participating in illegal fundraising may be personally liable for financial losses.
Shenzhen government urges the public to have a “rational” investment mentality
The city also urged the public not to believe the big promise. English translation reading:
“We urge the public to adopt a reasonable investment mindset, avoid blindly believing in grand commitments, establish a correct understanding of money and investment, and remain vigilant to avoid being deceived.”
Officials also told citizens to report any entity raising funds under the guise of Stablecoin Investments or similar programs. Chinese authorities say people can report these illegal activities to their regional authorities or law enforcement agencies.
They said the relevant departments will verify potential customers and take corresponding actions. In addition, informants may receive rewards in accordance with relevant regulations.
Related: Despite domestic bans in several countries, cryptocurrency payments abroad may be legal
Warnings arise in the wave of fake JD Stablecoin promotions
A week after the warning was issued, a week after the fake JD.com stablecoins appeared on Chinese social media.
On June 30, the Chinese e-commerce giant said the entity had been misleading the public, claiming to be linked to the company and providing fake stable stablecoins in exchange for registered users. Similar fraudulent stability campaigns have also occurred across China, according to data from WeChat accounts.
JD showed a strong interest in stabilizing proteins. On June 18, it announced plans to apply for a Stablecoin license in Hong Kong.
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