Beijing Internet Finance Association: Beware of Illegal Fundraising Using New Concepts Such as Stablecoins

The Beijing Internet Finance Association stated in its official account that recently, various 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," and "digital assets," are taking advantage of the public's lack of in-depth understanding of new financial concepts. They issue or hype so-called "virtual currencies," "digital assets," and "stablecoin investment projects," promising high returns to induce the public to invest funds in trading and speculation.
Such activities have significant characteristics of illegal fundraising risks:
First, lack of 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 absorb deposits, sell wealth management products, or issue securities to the public.
Second, conceptual packaging. They use emerging and complex concepts such as "stablecoins," "Decentralized Finance (DeFi)," and "Web3.0" for packaging and hype, deliberately creating information asymmetry to confuse investors.
Third, false promises. There are widespread exaggerations and false promises, such as "guaranteed profit without loss," "high fixed income," and "guaranteed principal and interest," using the public's psychology of pursuing high returns.
Fourth, fund pool operation. Their operating model often relies on absorbing funds from new investors to maintain operation or pay the returns of previous investors. Once the capital chain breaks or the project party absconds, investors will face the huge risk of being unable to recover their principal.
Fifth, risk spillover. Such activities are very likely to evolve into illegal fundraising, financial fraud, pyramid schemes, money laundering and other illegal and criminal activities, seriously disrupting economic and financial order, infringing on the safety of people's property, and undermining the foundation of social integrity.
The Beijing Internet Finance 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 guarantee principal and interest, and remember that "high returns are inevitably accompanied by high risks"; before making investment and financial management, be sure to verify the legal qualifications of relevant institutions and products through the official channels of the national financial management department, and choose licensed and formal financial institutions; fully understand the high complexity and volatility of digital currencies such as "stablecoins" and related innovative concepts, and establish correct currency 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 illegal fundraising, please report it to the financial regulatory authorities, public security departments or this association immediately (association reporting hotline: 400-661-9609).
According to the "Regulations on Preventing and Disposing of Illegal Fundraising" and other laws and regulations, the state prohibits any form of illegal fundraising. Losses suffered from participating in illegal fundraising shall be borne by the participants themselves. Consumers are requested to effectively raise their awareness of risk prevention and jointly maintain a good financial ecological environment. [Odaily Planet Daily]