China Is Serious About Hunting Crypto Scams

One of the reasons why Bitcoin is down below $8,000 today is due to the regulatory changes that happened around the globe.

China is among the first to announce a ban on cryptocurrency activities. The country’s regulators stopped crypto operations from exchanges to other crypto related activities. According to experts, officials feared capital outflow considering the price swings typically seen in the crypto market. Another reason for the ban is the number of scams in the crypto market

But just how serious is China when it comes to implementing their ban on cryptocurrencies? Prosecutors from China charged four suspects being involved in operating a crypto pyramid scheme. According to reports, suspects were able to raise $2 billion. The invest scheme is called Weika Coin, the Chinese name for OneCoin.

Three Phases Since 2017

Starting September 2017 when China banned cryptocurrency activity in the country, there were three phases conducted that have resulted in the prosecution of 98 individuals for allegedly deceiving investors in China. And just how serious is the Chinese government when it comes to implementing its rules and regulations? There were already a number of people who were sentenced with up to four years in prison and/or fined ranging from $1,565 to $783,000.

Wenka Coin involved 2 million victims while the total amount was discovered to be at 15 billion yuan or roughly around $2 billion. Authorities were able to recover 1.7 billion yuan or $266 million.

An individual by the name of Ruja Ignatova founded the OneCoin scheme. It isn’t just in China that this fraudulent scheme ran rampant. In fact, authorities in US, Europe and India are also making their move against Ignatova.

Tighter Rules

China is also doing its best to educate the citizens. China’s financial cybercrime cell—the National Internet Financial Risk Analysis Technology Platform or IFCERT has released a statement that details the most common strategies used by scammers.

IFCERT also discovered that there were around 421 digital currencies that are most likely scams. All of which shows a fraudulent business model. However, the watchdog clarified that most of the platfroms are hosted overseas which make it difficult to track each one of them.

There are also some Chinese ICOs that are continuing their operations despite the ban by the central government. It was reported that Chinese ICOs “intensified” since the ban came into effect.

According to Desmond Marshall, “The situation with China is a little bit sensitive at this point around here”. Marshal is the Managing Director of the Hong Kong branch of the Floor which is a fintech development company that is based in Israel.

Marshal mentioned that though China has been ranking cryptocurrencies and is trying to develop one for their own use, it is only made for a “very specific purpose”. This means that Central Bank of China developing digital payment of its own doesn’t mean that the country is opening its doors to other digital currencies anytime soon.

The payment system that is being developed by Chinese authorities are going to be aimed for buying consumer goods or for you to pay your own rent.