Chinese Crackdown leaves a void – filled by scammers

Scammers filled the vacuum that was formed after the crackdown by Chinese authorities of Bitcoin and Ethereum exchanges. More than 107 fake, ponzi-cryptocurrencies have formed in China. These cryptocurrencies, widely known as altcoins, promise investors with high percentage of guaranteed returns.

Since the cryptocurrency market is fairly new and not well known to the investors, therefore, many fall into the trap and invest their lifesavings into these ponzi schemes. Just this January, a couple divorced because the Chinese woman invested all of their lifesavings into the Five Elements Coin. The conmen promised her guaranteed returns and stated that they were supported by the government.  The woman not only invested the couple’s lifesaving but also convinced her relatives invest in the scheme. The whole episode ended with her losing all of her money and getting a divorce.

By eliminating the crypto exchanges, the Chinese government has given schemers a golden chance to make easy money by tricking innocent, unaware investors, who want to earn profits by investing in the crypto market.

However, all is not bleak, and the Chinese Public Security department has started taking action against these ponzi schemes. More than 5,900 criminal charges on such ponzi schemes have been processed. Conmen have gathered more than $4.5 billion through these schemes. The department also investigated the obscure alt-coins that promise investors with guaranteed returns. China’s official press agency, Xinhua, reports that these pyramid schemes use concepts such as blockchain and cryptocurrency to confuse newby investors.

The Chinese woman who lost all her lifesaving and got divorced in just one of the many who have suffered tremendously due to these fraudsters. In Haikou, the capital of the Hainan province in China, the police have busted an Asia-Euro coin, which recruited more than 47,000 people in a year to trade their fake cryptocurrency. The scheme was able to gather $613 million. The main culprits associated with the Asia-Euro coin told their investors that they are experts in the field of cryptocurrency and had contacts all over the world. The suspects wooed their investors with fancy restaurant dinners.

As social media is readily available to potential customers, ponzi schemes, like the Asia-Euro coin, do not have to work as hard as they might have had to work a few years ago. They can simply bring in investors by sharing their schemes over these social networks. This might just be one of the limitations of the social media networks that are so readily available these days. One should always be on the lookout for fake schemes and raise awareness against them by reporting them to the authorities.