Several financial regulatory agencies in China, such as the People’s Bank of China, the Banking Regulatory Commission, the Ministry of Public Security, the Central Commission for Cyberspace Affairs, and the State Administration for Market Regulation, issued a warning on Friday, August 24th, about the risks involved in illegal fundraising through cryptocurrency transactions.

According to the document, criminals, through projects concerning the ICOs, that are “not based on blockchain technology,” absorb funds from the public against the “legitimate interests” of the investors themselves. This through speculative activities, Ponzi schemes, and frauds.

The Chinese authorities point out that criminals in China use foreign servers to create websites for their activities, having Chinese investors among their victims. In addition to these online tools, they use instant messaging applications to facilitate digital coin trading between residents.

Some of the people, the text reads, resort to offering chat groups as intermediaries to invest in cryptocurrency projects abroad on behalf of domestic investors, and that these are most likely fraudulent activities. The publication highlights that the monitoring and follow-up of such funds are challenging to carry out abroad.

China takes the measures against cryptocurrency to the next level

China’s regulatory agencies also warned that criminals are building their scams by taking advantage of the volatility of cryptocurrency and handling the concept of “hot speculation,” while offering high returns and low investment risks. The publication notes that criminals use strategies such as Initial Coin Offers (ICOs) and other fundraising methods for their illegal operations, including Initial Exchange Offers (IEOs), Initial Fork Offers (IFOs) and Initial Mining Offers (IMOs).

This action is part of the recent measures taken by the Chinese administration to restrict the marketing of digital assets and to ban any information related to cryptocurrency.

This warning comes after the Asian nation’s regulatory authorities announced earlier this week, on August 23rd, that they are working to block some 124 foreign crypto exchange platforms still operating in the country.

This news was released by ShanghaiSecurities News, which reported that the Chinese government would continue to monitor and close down websites that deal in digital assets trading and the Initial Coin Offering (ICO). Also, the Chinese banned accounts related to cryptos in the WeChat instant messaging application and the crypto-related event and marketing.