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China’s central bank: Virtual currencies are lawless elements

People's Bank of China

Since the ban on crypto-based crowdfunding imposed in China last September, the regulators have often expressed their despise with these virtual assets. The People’s Bank of China, the Chinese central bank has released a risk warning about the prevalent “illegal” fundraising “in the name of virtual currency and blockchain” on the official website today, 24th August.

It states that several “lawless elements” have proliferated in the public space and infringed legitimate rights under the banner of financial innovation and blockchain by issuing “so-called” virtual and digital currency and assets. The central bank has collectively issued the warning along with the Central Network Information Office, The Banking Regulatory Commission, the Ministry of Public Security, and the General Administration.

The statement points out that several activities and projects that claim to be based on blockchain are not actually making use of this technology, and are instead involved in “speculating blockchain concepts for illegal fundraising, pyramid schemes and fraud.”

The agencies believe that with online trading and fundings, the risk of such frauds “spreads widely and the diffusion speed is fast.” The origin of such activities to raise funds illegally is “mostly overseas” which makes the tracking and monitoring a difficult task. The release also pointed out that crypto investment cycles are often short as they are driven by temptations like high returns, airdrops, and celebrity names. Thus, the value of currency keeps falling and rising.

Criminals make use of a variety of schemes to get money from the people. Two popular ones are “static gain,” and “dynamic income.” Additionally, “some lawless elements” have also made use of tokens in the name of ICOs and IPOs under the banner of a shared economy, which according to the authorities is “deceptive.”

Although the announcement has not outlined any legal actions or proceedings that would be executed against the defaulters, it has warned the public to be alert against such scams and frauds.

This development comes just a few days after WeChat, China’s most popular social app released a statement about banning accounts that were suspected of publishing information regarding ICOs and cryptocurrency trading.

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