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

The Beijing Internet Finance Association issued a statement saying that recently, various digital currencies and related concepts represented by "stablecoins" have attracted market attention. Some illegal institutions and individuals, under the guise of "financial innovation," "blockchain technology," "digital economy," and "digital assets," take advantage of the public's lack of in-depth understanding of new financial concepts to issue or hype so-called "virtual currencies," "digital assets," and "stablecoin investment projects," promising high returns and inducing 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 is a widespread existence of exaggerated publicity and false promises, such as "guaranteed profit without loss," "high fixed income," and "guaranteed principal and interest payment," taking advantage of the public's psychology of pursuing high returns. Fourth, Ponzi scheme operation. Their operation mode 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 and criminal activities such as illegal fundraising, financial fraud, pyramid schemes, and money laundering, which seriously disrupt economic and financial order, infringe on the safety of people's property, and damage the foundation of social integrity. [Foresight News]