Authorities issue alert as fraudulent promotions proliferate

Authorities in Shenzhen, China, have warned citizens about illegal fundraising schemes disguised as stablecoin and cryptocurrency investments. The Shenzhen city government task force for combating illicit financial activity issued its alert Monday.

The warning urged the public to be cautious of unlicensed entities promoting digital asset investments. Officials stated these groups exploit the public’s limited knowledge of stablecoins and crypto terminology to mislead investors and chase speculative returns.

They further clarified that these organizations often serve as fronts for illegal operations involving fundraising, online gambling, fraud, pyramid schemes, and money laundering.

The task force emphasized that these groups lack the authority to raise public funds and warned citizens that losses resulting from participation in these schemes are unlikely to be reimbursed.

Under Chinese law, individuals who participate in illegal fundraising may bear personal liability for their resulting financial losses.

Shenzhen’s government urges citizens to adopt a rational investment mindset

The city government issued further guidance: “We urge the public to adopt a rational investment mindset, refrain from blindly believing grandiose promises, establish a correct understanding of money and investment, and stay vigilant to avoid being deceived.”

Officials also instructed citizens to report any entities seeking to raise funds under the guise of stablecoin investments or similar schemes. Chinese authorities advised reporting these illegal activities to district authorities or law enforcement.

The relevant departments were instructed to verify all reports and take appropriate action. Under a reward structure, informants may receive compensation based on official regulations.

Related: Crypto payments abroad may be legal despite domestic bans in several countries

Fraudulent promotions coincide with Shenzhen warning

This alert came one week after a wave of fake JD stablecoin promotions emerged on Chinese social media. On June 30, JD.com stated that entities had misled the public, falsely claiming affiliation with the company and offering fake stablecoins.

Similar fraudulent stablecoin campaigns have reportedly originated across China through various WeChat accounts. Notably, JD has expressed interest in stablecoins itself.

JD announced on June 18 plans to apply for a stablecoin license in Hong Kong.

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