107 Altcoins are under investigation in China
China has declared that 107 altcoins are under investigation for financial crimes. According to the authorities, these coins are large-scale Ponzi schemes in disguise, even though these digital coins call themselves fintech products. As bitcoin price is at an historical maximum, several “Fintech” altcoins have started to appear in the cryptocurrency industry.
An economics professor at Northwest University in Xi’an declared that:
“The ban on ICOs and closure of exchanges for mainstream virtual currencies created a market vacuum and gave rise to various knock-off cryptocurrencies. Scheme suspects would tell investors that mainstream cryptocurrencies are losing traction because of the ban and it’s their time to shine.”
Chinese media conducts investigation into altcoin groups
Xinhua news journalists made an investigation on a few social media websites. They introduced the keyword “coin” on popular communication tools like QQ and Wechat, and found altcoin groups like “Red Shell Coin(RSS),” “HBB Environmental Protection Coin,” and “Radar Coin(VBC).” On these groups, the moderators show newcomers pictures of their high return and convince them to invest.
Moreover, these group moderators promise newcomers that if they “enroll five participants, you can get 600 yuan ($90), even a beggar can do this job.”
Financial experts declared that these schemes are starting to spread because it is cheap and easy to duplicate an altcoin. At the end of September, Chinese public security departments have declared that they have managed to expose 5.800 criminal cases on Ponzi schemes. These schemes have managed to raise more than 30 billion yuan, which is the equivalent of $4.5 billion.
A police officer in Haikou stated that:
“As the perpetrators are often located in different parts of China and orchestrate the scams via computers and mobile phones, it’s quite difficult to detain all at once and secure the evidence.”
As the social media platforms and mobile banking spread, the police thinks that Ponzi schemes will attack more and more investors.
