Shenzhen Authorities Warns Of Fake Stablecoin Investments Exploiting Newbies

The city’s government task force issued a high alert on Monday, urging residents to exercise caution when approached by unlicensed entities promoting digital asset investments.

Officials highlighted that these fraudulent groups often exploit the general public’s limited understanding of stablecoins and digital asset terminology to mislead investors and fuel speculative investments.

According to the task force, many of these organizations are merely fronts for illegal operations, including unauthorized fundraising, online gambling, fraud, pyramid schemes, and money laundering.

The government emphasized that such groups lack the legal authority to raise funds from the public.

Citizens were also warned that any losses incurred through participation in these schemes are unlikely to be recovered.

Under Chinese law, individuals involved in illegal fundraising activities may be held personally liable for any financial losses.

Shenzhen Authorities Urges Citizens To Adopt A Rational Mindset

In its statement, the Shenzhen city government urged residents to maintain a rational approach to investing and to avoid being swayed by promises of high returns.

The official English translation of the statement reads:

“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.”

Authorities encouraged citizens to report any individuals or organizations soliciting funds under the guise of stablecoin or cryptocurrency investments.

Reports can be submitted to district authorities or law enforcement agencies, and informants may receive rewards in based on relevant regulations.

Officials assured the public that all leads would be thoroughly investigated and appropriate action would be taken.

Leveraging On JD.com's Stablecoin Frenzy

This warning comes on the heels of a recent wave of fraudulent promotions involving fake JD.com stablecoins circulating on Chinese social media platforms.

On June 30, JD.com clarified that these entities had been misleading the public, claiming to be affiliated with the company and offering fake stablecoin in exchange for user sign-ups.

Similar deceptive campaigns have been reported across China, according to various WeChat accounts.

JD.com has demonstrated a legitimate interest in stablecoins, announcing on June 18 its intention to apply for a stablecoin license in Hong Kong.

However, the company has distanced itself from any unauthorized promotions or offers currently circulating online.