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

Odaily Planet Daily News Beijing Internet Financial Industry Association published an article on its official account stating 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", "digital assets" and other gimmicks, take advantage of the fact that the public's understanding of new financial concepts is not yet in-depth, and issue or hype the so-called "virtual currency", "digital assets", "stablecoin investment projects" and other methods, promise high returns, and induce the public to invest funds to participate in trading speculation. Such activities have significant illegal fundraising risk characteristics: First, lack of qualifications. These institutions or individuals have not been approved or filed 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 financial products or issue securities to the public. Second, concept packaging. Using emerging and complex concepts such as "stablecoins", "decentralized finance (DeFi)", and "Web3.0" for packaging and hype, deliberately creating information asymmetry and confusing investors. Third, false promises. There are widespread exaggerated propaganda and false promises, such as "guaranteed profit without loss", "high fixed income", "principal protection and interest payment", etc., which take advantage of the public's pursuit of high returns. Fourth, the operation of the capital pool. Its operating model often relies on absorbing funds from new investors to maintain operations or pay the returns of previous investors. Once the capital chain is broken or the project party runs away, investors will face huge risks of not being able to recover the principal. Fifth, risk spillover. Such activities can easily evolve into illegal fundraising, financial fraud, pyramid schemes, money laundering and other illegal and criminal activities, seriously disrupting the economic and financial order, infringing on the property safety of the people, and damaging the foundation of social integrity. 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 licensed and formal financial institutions; fully understand the high complexity and volatility of digital currencies such as "stablecoins" 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, the public security department or this association immediately (the association's reporting hotline: 400-661-9609). According to the "Regulations on the Prevention and Disposal of Illegal Fundraising" and other laws and regulations, the state prohibits any form of illegal fundraising. The losses suffered by participating in illegal fundraising shall be borne by the participants of the fundraising. Consumers are requested to effectively improve their awareness of risk prevention and jointly maintain a good financial ecological environment.