Shenzhen issues warning on stablecoin scams, illegal crypto fundraising

Authorities in Shenzhen, China, have issued a strong warning against illegal fundraising schemes disguised as stablecoin and cryptocurrency investments. The Shenzhen city government’s task force for combating illicit financial activities alerted the public to be cautious of unlicensed entities promoting digital asset investments, emphasizing that many such groups exploit the public’s limited understanding of stablecoins and crypto terminology to mislead investors and fuel risky, fraudulent schemes.

These illegal operations often serve as fronts for activities including fraud, pyramid schemes, and money laundering etc. The authorities stressed that these groups lack legal authorization to raise funds from the public, and any financial losses suffered by investors in these schemes are unlikely to be recovered. Under Chinese law, individuals who participate in illegal fundraising may face personal liability for their losses.

The Shenzhen government urged citizens to adopt a rational investment mindset, avoid blindly trusting grand promises of high returns, and develop a correct understanding of money and investments to prevent deception. They also encouraged the public to report suspicious entities involved in stablecoin fundraising or similar scams to local district authorities or law enforcement, with potential rewards for informants.

This warning follows a recent surge in fraudulent promotions involving fake stablecoins, including campaigns falsely claiming affiliation with major companies. Shenzhen authorities highlighted that some scams misuse popular stablecoins such as Tether (USDT) to attract funds under false pretenses, often linked to money laundering and other illicit financial activities.

These developments occur amid China’s strict ban on cryptocurrency buying selling and ongoing efforts to develop its own state-backed digital currency, the digital yuan, reflecting regulatory concerns about decentralized digital assets.

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