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On June 3, the Hainan Provincial Local Financial Regulatory Bureau, the People's Bank of China Haikou Branch, the Hainan Banking and Insurance Regulatory Bureau, the Hainan Provincial Cyberspace Administration, the Hainan Provincial Public Security Department and the Hainan Provincial Market Supervision Bureau jointly issued a risk warning, reminding investors to guard against illegal fundraising activities under the names of "virtual currency" and "blockchain".
Recently, some criminals have used the name of "virtual currency", "blockchain" and "digital assets", and under the banners of "investment rebates" and "guaranteed principal and returns", have lured investors into buying "XX coins" and "XX beans" and other forms of "virtual currency" to absorb public funds, violating the "Announcement on Preventing the Risks of Token Issuance and Financing" issued by the People's Bank of China and seven other departments, and are suspected of engaging in illegal financial activities and seriously disrupting the economic and financial order.
In order to protect the legitimate rights and interests of investors and prevent and resolve financial risks, the above-mentioned departments jointly solemnly warn: No organization or individual in Hainan Province shall engage in illegal token issuance and financing activities; any so-called token financing trading platform shall not engage in the exchange of legal currency and tokens, "virtual currency", shall not buy or sell tokens or "virtual currency" or act as a central counterparty to buy or sell tokens or "virtual currency", and shall not provide pricing, information intermediary and other services for tokens or "virtual currency"; financial institutions and non-bank payment institutions shall not directly or indirectly provide account opening, registration, trading, clearing, settlement and other products or services for token issuance financing and "virtual currency", and shall not underwrite insurance business related to tokens and "virtual currency" or include tokens and "virtual currency" in the scope of insurance liability.
Hainan's financial management, cybersecurity and informatization management, public security and market supervision departments continue to maintain high-pressure supervision on "virtual currency" transactions, initial coin offerings (ICOs) and disguised ICOs, and will use a combination of on-site interviews, administrative investigations, website closures, criminal case filings and other means to crack down on them.
The above-mentioned departments specifically require that if financial institutions and non-bank payment institutions in the jurisdiction discover clues of illegal and irregular token issuance and financing transactions, they should report them to the relevant departments in a timely manner; various financial industry organizations should interpret policies well, urge member units to consciously resist illegal financial activities related to token issuance and financing transactions and "virtual currency", stay away from market chaos, strengthen investor education, and jointly maintain normal financial order.
At the same time, we remind the majority of financial consumers and investors in the province: they should strengthen their awareness of risk prevention, enhance their ability to identify risks, and consciously resist illegal financial activities related to token issuance and "virtual currency". If you find any ICO variants or any organization or individual that continues to conduct ICO and "virtual currency" trading business for domestic residents by deploying overseas servers, you can collect and preserve relevant information and evidence and actively report to the relevant regulatory authorities. If any of them are suspected of committing crimes, you can actively report to the public security organs. How to identify illegal fundraising under the names of "blockchain" and "virtual currency"?
1. Networking and cross-border are obvious. Relying on the Internet and chat tools to conduct transactions and using online payment tools to receive and pay funds, the risks are widespread and spread quickly. Some criminals rent overseas servers to build websites, actually carry out activities for domestic residents, and remotely control and implement 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 very likely a fraudulent activity. Most of the funds for these illegal activities flow overseas, making supervision and tracking very difficult.
Second, they are highly deceptive, tempting, and concealed. They use hot concepts to hype and fabricate a variety of "high-end" theories. Some even use celebrities to promote and use airdrops of "candy" as temptations, claiming that "the currency value will only rise and not fall" and "the investment cycle is short, the return is high, and the risk is low", which is highly deceptive. In actual operations, criminals illegally make huge profits by manipulating the price trend of so-called virtual currencies behind the scenes, setting profit and withdrawal thresholds, and other means. In addition, some criminals also issue tokens under the names of ICO, IFO, IEO, etc., or hype virtual currencies in the form of IMO under the banner of the sharing economy, which is highly concealed and confusing.
3. There are multiple illegal risks. Through public propaganda, criminals use "static income" (profit from currency appreciation) and "dynamic income" (profit from developing downlines) as bait to attract the public to invest funds, and induce investors to develop personnel to join, and continuously expand the capital pool, which has the characteristics of illegal fundraising, pyramid selling, fraud and other illegal activities.
Such activities use "financial innovation" as a gimmick, but in essence they are a Ponzi scheme of "borrowing new to repay old", and the flow of funds is difficult to maintain in the long term.
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