Shenzhen Warns Against Stablecoin Scams

Authorities in Shenzhen, China, warned citizens about illegal fundraising schemes disguised as stablecoin and cryptocurrency investments.

Shenzhen’s city government task force for combating illicit financial activity issued an alert on Monday, urging the public to be cautious of unlicensed entities promoting digital asset investments.

Officials said the groups exploit the public’s limited knowledge of stablecoins and crypto-related terms to mislead investors and fuel speculative investments. 

They added that such organizations are often fronts for illegal operations that conduct fundraising, online gambling, fraud, pyramid schemes and money laundering.

The task force said the groups do not have the authority to raise funds from the public and warned citizens that losses incurred from these schemes are unlikely to be reimbursed. 

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

Shenzhen’s gov urges the public to have a “rational” investment mindset

The city government also urged the public not to believe grand promises. An English translation read: 

“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 told citizens to report any entities raising funds under the guise of stablecoin investments or similar schemes. Chinese authorities said people can report these illegal activities to their district authorities or law enforcement. 

They said the relevant departments would verify the leads and act accordingly. In addition, informants may receive rewards based on relevant regulations. 

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Warning comes amid wave of fake JD stablecoin promos

The warning came a week after a wave of promotions offering fake JD.com stablecoins emerged on Chinese social media. 

On June 30, the Chinese e-commerce giant said that entities had been misleading the public, claiming to be affiliated with the company and offering fake stablecoins in exchange for users signing up. Similar fraudulent stablecoin campaigns have emerged across China, according to WeChat accounts. 

JD has shown a strong interest in stablecoins. On June 18, it announced plans to apply for a stablecoin license in Hong Kong. 

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