Beijing Internet Finance Industry Association: Beware of illegal fundraising using new concepts such as stablecoins

Odaily News The Beijing Internet Finance Industry Association published an article on its official account stating that recently, various types of digital currencies represented by stablecoins and related concepts have attracted market attention. Some illegal institutions and individuals, under the guise of financial innovation, blockchain technology, digital economy, digital assets and other gimmicks, have taken advantage of the fact that the publics understanding of new financial concepts is still incomplete. By issuing or hyping the so-called virtual currency, digital assets, stablecoin investment projects, etc., they promise high returns and induce the public to invest funds to participate in trading speculation.
Such activities have significant risk characteristics of illegal fund-raising:
First, they lack qualifications. These institutions or individuals have not been approved or registered by the financial management department of the State Council in accordance with the law, and do not have the legal qualifications to accept deposits from the public, sell financial products or issue securities.
The second is concept packaging. They use emerging and complex concepts such as stablecoin, decentralized finance (DeFi) and Web3.0 to package and hype, deliberately create information asymmetry and confuse investors.
The third is false promises. Exaggerated publicity and false promises are common, such as guaranteed profit without loss, high fixed income, principal protection and interest payment, etc., taking advantage of the publics pursuit of high returns.
Fourth, the operation of the capital pool. Its operation model often relies on absorbing funds from new investors to maintain operations or pay the profits of previous investors. Once the capital chain is broken or the project owner runs away, investors will face a huge risk of not being able to recover their principal.
Fifth, risk spillover. Such activities can easily evolve into illegal fundraising, financial fraud, pyramid schemes, money laundering and other illegal and criminal activities, which seriously disrupt the economic and financial order, infringe on the property safety of the people, and undermine the foundation of social credibility.
The Beijing Internet Finance Industry Association solemnly reminds and calls on consumers: Be sure to recognize the essence, be highly vigilant against any investment projects that promise high returns and guaranteed principal and interest, and keep in mind that high returns are inevitably accompanied by high risks; before investing and managing finances, be sure to verify the legal qualifications of relevant institutions and products through the official channels of the national financial management department, and choose a licensed and formal financial institution; fully understand the high complexity and volatility of digital currencies such as stable coins and related innovative concepts, establish correct monetary concepts and rational investment concepts; consciously resist and stay away from any form of virtual currency speculation, illegal token issuance and unapproved digital asset investment projects, and effectively protect personal property safety. If you find any clues of related illegal fundraising, please report it to the financial regulatory department, public security department or this association immediately (Association reporting hotline: 400-661-9609).
According to the Regulations on Preventing and Dealing with Illegal Fund Raising and other laws and regulations, the state prohibits any form of illegal fund raising. The losses incurred by participating in illegal fund raising shall be borne by the participants. Consumers are requested to effectively enhance their awareness of risk prevention and jointly maintain a good financial ecological environment.