Beijing Internet Finance Industry Association: Beware of Illegal Fundraising Using New Concepts Such as Stablecoins

BlockBeats News, July 12, the Internet Finance Industry Association of Beijing Municipality stated in its official WeChat account article that recently, various types of digital currencies and related concepts represented by "stablecoins" have attracted market attention. Some illegal institutions and individuals, under the guise of "financial innovation," "blockchain technology," "digital economy," "digital assets," and other buzzwords, take advantage of the fact that the general public's understanding of new financial concepts is not yet deep, by issuing or hyping the so-called "cryptocurrency," "digital assets," "stablecoin investment projects," and other methods, promising high returns, inducing the public to invest funds to participate in trading and speculation.

This kind of activity has significant characteristics of illegal fundraising risks:

First, lack of qualifications. These institutions or individuals have not been legally approved or filed by the State Council's financial regulatory authorities, lacking the legal qualifications to accept deposits from the public, sell financial products, or issue securities.

Second, concept packaging. Using emerging and complex concepts such as "stablecoin," "Decentralized Finance (DeFi)," "Web3.0" for packaging and promotion, deliberately creating information asymmetry to confuse investors.

Third, false promises. There is widespread exaggeration and false promises, such as "risk-free profits," "high fixed income," "principal guaranteed interest," etc., exploiting the public's desire for high returns.

Fourth, fund pool operation. Their operation model often depends on attracting new investors' funds to maintain operation or pay early investors' returns. Once the funding chain breaks or the project party runs away, investors will face a huge risk of being unable to recover their principal.

Fifth, risk spillover. Such activities are highly prone to evolve into illegal fundraising, financial fraud, pyramid schemes, money laundering, and other illegal criminal activities, severely disrupting the economic and financial order, infringing on the property security of the people, and damaging the social integrity foundation.

The Internet Finance Industry Association of Beijing Municipality solemnly reminds and urges the general consumers: Be sure to recognize the essence, be highly vigilant of any investment projects that promise high returns and principal guaranteed interest, always remember that "high returns are always accompanied by high risks"; before investing, be sure to verify the legal qualifications of relevant institutions and products through the official channels of the national financial regulatory authorities, choose licensed and regular financial institutions; fully understand the high complexity and volatility of "stablecoins" and other digital currencies and related innovative concepts, establish the correct concept of money, and a rational investment philosophy; consciously resist, stay away from any form of cryptocurrency hype, illegal token issuance, and unauthorized "digital asset" investment projects, effectively protect personal property security. If you discover relevant clues of illegal fundraising, please report them to the financial regulatory authorities, public security departments, or this association immediately.