China recently issued new anti-fraud rules to combat financial scams involving cryptocurrencies. Fake P2P lending platforms continue to thrive even though the country has closed around 6,000 of them.
In recent days, the State Council of China issued new rules to stop scammers from illegally raising funds. The new anti-fraud regulations are aimed at ending financial scams, as well as activities related to investment in cryptocurrencies.
The Chinese banking regulator noted that financial fraud is becoming more complex and expanding. That has led the entity to request officials to pay greater attention to the fraud hiding behind the cryptocurrency ecosystem. They also warn about wealth management, loan platforms, and real estate, among others, according to local digital media.
The new measures seek to detect crime early, give a legal response when the illicit act takes place, and “prevent” the illegal raising of funds.
Fake P2P Lending Platforms Operate on Behalf of Investment and Finance Management
To start with, the measures make it possible to identify illegal fundraising and fraud operating in the name of financial and investment management. Many scammers launch fake P2P lending platforms to lure in victims with misleading quick-win offers.
The Chinese government has closed around 6,000 fraudulent platforms in recent years. However, a regulator told Reuters that they continue to thrive alongside other forms of financial scams.
Under the new rules, local officials have a responsibility to end investment scams at an early stage. “Previously, victims had to go to court, but now they can take officials to court for negligence,” the publication adds.
The governments of the regions are also receiving the cooperation of banks to identify suspected illegal investment schemes involving cryptocurrencies. A source reported to Reuters that there might even be a blacklist of bank accounts associated with scams.
The Number of Scams Involving Bitcoin and Other Cryptocurrencies Multiply
In 2020, the number of cryptocurrency-related scams around the world increased by 40%, compared to the previous year. At that time, the Chinese government launched a campaign to address the proliferation of scams involving blockchain technology and cryptocurrencies.
In 2019, scammers promoted 32 thousand projects that claimed to use blockchain networks in the Chinese territory. Official Wu Zhen noted that many of these companies were taking advantage of the blockchain technology boom to gain momentum. However, less than 10% of those firms actually used or worked with this technology.
Scams involving cryptocurrencies proliferate as the prices of these assets rise and interest in this market grows. In 2020 alone, more than 400,000 emerged, and crypto-asset crime may increase by 75% by the end of 2021.
The prices of cryptocurrencies have reached all-time highs that have generated significant gains for their holders. Scammers are aware of such a situation, so they have created fake platforms to make misleading offers to unsuspecting users. However, several studies indicate that the illegal use of Bitcoin hardly represents less than 1% of the market.
By Alexander Salazar
