Chinese local authorities warn public of crypto-related scams amid broader crackdown

Chinese financial watchdogs and police in a city in the Liaoning province released a notice urging investors to beware of "illegal fundraising activities" disguised as lucrative investment opportunities involving cryptocurrency and the metaverse as China continues its crackdown on crypto-related fraud amid a ban on crypto trading.

In the joint notice, Dalian's securities regulator and six other authorities stated that "unscrupulous individuals" have orchestrated scams through online platforms such as WeChat groups to lure investors into downloading illegal apps and purchasing illegitimate cryptocurrencies. Such behaviors could lead to suspected illegal fundraising, fraud and other criminal activities, according to the authorities.

The public warning from Dalian’s authorities came after several previous notices from the nation’s regulatory bodies, including the People’s Bank of China, detailing the illegal nature of token issuance, financing and trading.

In September 2021, the PBOC, the Supreme People’s Court and several other central authorities issued a notice banning all crypto trading activities on the mainland. The ban clarified that services provided by overseas crypto exchanges to Chinese residents on the mainland are considered illegal financial activities.

Unlike its neighboring Chinese mainland’s broader crackdown on crypto trading and mining, Hong Kong rolled out the welcome mat for crypto firms last year. In June 2023, Hong Kong officially started its crypto licensing regime for virtual asset trading platforms, allowing licensed exchanges to offer retail trading services. Hong Kong has granted licenses to two platforms — HashKey and OSL.