In recent years, illegal fundraising has been using the banner of "blockchain" and "financial innovation" to absorb funds through the issuance of so-called "virtual currencies," "virtual assets," "digital assets," and other means, infringing on the legitimate rights and interests of the public. Such activities are not truly based on blockchain technology, but rather hype up the concept of blockchain and engage in illegal fundraising, pyramid schemes, and fraud.
What is blockchain?
Blockchain is a new type of computer technology application model. Simply put, blockchain is a distributed digital ledger that can record all transaction records. Each block is like a hard disk, storing all the information and encrypting it through cryptographic techniques to ensure that the stored information cannot be tampered with.
How to identify illegal fundraising using the concept of blockchain?
Clearly networked and cross-border
Relying on the Internet and chat tools for transactions, and using online payment tools to collect and receive funds, risks spread widely and spread quickly. Some illegal elements rent overseas servers to build websites, essentially targeting domestic residents to carry out activities, and remotely control the implementation of illegal activities. Some individuals claim in chat tool groups that they have obtained investment quotas for high-quality overseas blockchain projects and can invest on their behalf, which is highly likely a fraudulent activity. These illegal activities often result in funds flowing overseas, making it difficult to regulate and track them.
Strong deception, temptation, and concealment
Using hot concepts for speculation, fabricating various "high-end" theories, and even using celebrities to "stand on the platform" for promotion, using airdrops of "candies" as temptations, claiming that "the currency value only rises and does not fall" and "the investment cycle is short, the returns are high, and the risks are low", which has strong persuasiveness. In practical operation, criminals illegally make huge profits by manipulating the price trends of so-called virtual currencies behind the scenes, setting profit and withdrawal thresholds, and other means. In addition, some illegal individuals also issue tokens under various pretexts such as ICO, IFO, IEO, or use the banner of sharing economy to speculate on virtual currencies through IMO, which has strong concealment and confusion.
There are multiple risks of illegal activities
Unscrupulous individuals use "static returns" (profits from currency appreciation) and "dynamic returns" (profits from offline development) as bait through public propaganda, attracting the public to invest funds and enticing investors to develop personnel to join, continuously expanding the fund pool, and exhibiting characteristics of illegal fundraising, pyramid schemes, fraud, and other illegal behaviors.
How to prevent illegal fundraising under the guise of blockchain?
Like the vast majority of countries in the world, China currently does not recognize the legal status of virtual currencies, and any activities related to token issuance and financing are illegal. Currently, no trading platform in China is allowed to engage in the exchange business between legal currencies and tokens or "virtual currencies", buy and sell tokens or "virtual currencies", or provide pricing, information intermediaries, and other services for tokens or "virtual currencies". This type of activity, with the gimmick of "financial innovation", is essentially a Ponzi scheme of "borrowing new to repay old", and the operation of funds is difficult to sustain in the long run. Please have a rational view of blockchain among the general public, do not blindly believe in unrealistic promises, establish correct monetary and investment concepts, effectively enhance risk prevention awareness, and beware of being deceived.
How to enhance awareness of prevention?
Consumers should enhance their risk awareness, establish correct investment concepts, avoid participating in virtual currency trading and speculation activities, and beware of personal property and rights damage. Cherish personal bank accounts and do not use them for activities such as recharging and withdrawing virtual currency accounts, purchasing and selling transaction recharge codes, and transferring transaction funds to prevent illegal use and personal information leakage.
