Stablecoins like USDT and USDC would be fine if properly regulated, while Bitcoin is a “Ponzi scheme,” China’s BSN chairman told Cointelegraph.
As the Chinese government continues to celebrate the massive drop in the crypto market this year, a well-known local Blockchain expert has referred to crypto as a Ponzi scheme.
Yifan He, CEO of Red Date Technology – a major technology company involved in the development of China’s leading Blockchain technology project called Blockchain Service Network (BSN) – has written a new article dedicated to various types of cryptocurrencies and their alleged Ponzi nature.
“Biggest Ponzi Scheme in Human History”
Published in local newspaper The People’s Daily on Sunday, the article refers to private cryptocurrencies as the “biggest Ponzi scheme in human history.”
The author mentioned the collapse of the Terra network, with the native token Terra (LUNA) – now known as Luna Classic (LUNC) – crashing by 99% and the algorithmic stablecoin TerraUSD Classic (USTC) losing its 1-to-1 parity with the US dollar in May 2022. He also criticized the increasingly popular virtual currency concept known as X thing-to-earn, referring to move-to-earn or play-to-earn projects, calling the model “phishing strategy.”
The BSN president also mentioned some well-known criticisms of Bitcoin (BTC) by Microsoft founder Bill Gates and legendary investor Warren Buffett.
Yifan He himself is not a fan of Bitcoin or other similar cryptocurrencies. “Currently, all unregulated cryptocurrencies, including Bitcoin, are Ponzi schemes, as I understand it, with different levels of risk based on market capitalization and number of users,” he said in a statement to Cointelegraph on Monday.
The president of BSN added that he has never had any cryptocurrency wallet or assets related to them, as he asserts that, “I do not touch them and I will not touch them in the future even if they are regulated because I do not consider them to have any value.”
According to He, governments like El Salvador’s – which chose to adopt BTC as legal tender – “seriously need basic financial training.” The executive told Cointelegraph that, “Otherwise, they put entire countries at risk, unless their original intentions were to build state-owned cryptocurrency trading platforms and scam their citizens.”
He’s Further Remarks
Although he criticizes Bitcoin and many other cryptocurrency projects, he still believes that a part of the cryptocurrency market could serve if properly regulated. Cash-backed stablecoins such as Circle’s Tether (USDT) and USD Coin (USDC) should not be viewed as Ponzi-type schemes, the BSN president said, stating that, “USDC or USDT are payment related currencies, they are not speculative assets. Once they are fully regulated they will be fine.”
He previously spoke in favor of stablecoins in 2020. The executive once planned to integrate stablecoin payments into BSN starting in 2021. The plan was ultimately scrapped due to China’s hostility towards cryptocurrencies.
The news comes amid the Chinese government’s capitalization on the ongoing cryptocurrency market crash to justify its multiple bans against the sector. The latest coordinated ban was enacted in September 2021, with multiple Chinese authorities taking steps to ban all types of cryptocurrency transactions in the country.
Despite all efforts, China remained a dominant provider of Bitcoin mining around the world. According to data from the Cambridge Bitcoin Electricity Consumption Index, China was the second-largest producer of BTC mining hash rates, behind the United States, as of January 2022.
By Audy Castaneda
