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Chinese Industry Group Warns of Web3 and DeFi High-Return Deals Hiding Classic Ponzi Engines
A warning has been issued by a prominent Chinese industry group regarding the proliferation of Web3 and decentralized finance (DeFi) investment opportunities that promise excessively high returns, which may be concealing classic Ponzi schemes. The Beijing Internet Finance Industry Association (BIFA) recently released a statement cautioning retail investors to exercise extreme vigilance when encountering these lucrative investments.
According to local news sources, BIFA’s advisory emphasizes the potential for “old-style pyramid sales” being disguised as innovative Web3 and DeFi concepts. It is essential to scrutinize the legitimacy of any investment proposal that promises fixed returns, especially those involving “stablecoin wealth plans,” “Web 3.0 dividends,” or similar offers.
The warning comes amidst a surge in retail speculation on Chinese social media platforms, where an unofficial “stablecoin concept” index has skyrocketed by 88% since April. Notably, market interest also coincides with the upcoming introduction of Hong Kong’s stablecoin regulations, slated to take effect on August 1st. Moreover, reports have emerged about domestic blogs promoting “USDT mining pools” and “insured CNH stablecoins,” prompting local regulators to prepare enforcement actions.
BIFA has listed five key characteristics of illegal fundraising schemes: unlicensed operation, the use of technical jargon to amplify information gaps, providing false guarantees, recycling new deposits to pay earlier participants, and cross-linking into fraud or money laundering. The association urges investors to verify a firm’s license through national regulators and be aware that high returns often come with high risks.
This warning serves as a stark reminder for the importance of thorough due diligence when exploring investment opportunities in the Web3 and DeFi sectors.
Source: cryptoslate.com
