Bitcoin Forum
August 21, 2019, 06:24:02 AM *
News: Latest Bitcoin Core release: 0.18.0 [Torrent] (New!)
 
   Home   Help Search Login Register More  
Pages: [1]
  Print  
Author Topic: [2017-10-04]After Bitcoin Crackdown, Cryptocurrencies Go Clandestine in China  (Read 1223 times)
vit05
Hero Member
*****
Offline Offline

Activity: 672
Merit: 524



View Profile
October 05, 2017, 05:39:49 AM
 #1

https://www.wsj.com/articles/in-china-cryptocurrency-sales-persist-in-the-shadows-1507109400?tesla=y


Hawked in some cases as fail-safe investments, virtual currencies rode China’s swift digitization of its financial system in recent years. Concerns over irrational exuberance grew after individuals began piling into digital-currency investment programs that Chinese police said in some instances resembled pyramid schemes. Groups of investors were at times bussed to seminars at secret venues that were disclosed by organizers shortly before the meetings, people invited to some seminars say.

China is cracking down on bitcoin and other digital currencies because officials say they suspect fundraising projects linked to these instruments involve fraudulent activities, putting investors at risk, the central bank said.

“A lot of the initial coin offerings were just scams to get money without clear rules on returns for the investor,” said Regina Lai, commercial director for Sosobtc, a financial-technology information portal. “As with any rush into speculation, you might make a lot, but you might also lose a lot.”

Police in China’s southern city of Haikou in May broke up what they described as a 28-person ring that they alleged siphoned $620 million in illegal investments from 40,000 investors, the provincial government said. The group had promoted a virtual-currency investment called “Asia-Europe Coin,” which it allegedly told investors could grow 200 times in value in less than a year, police said. Promoters of the alleged scheme couldn’t be reached for comment.

Since the broad clampdown, seminars organized around cryptocurrency investing that once drew hundreds of people at a time have been scaled back and are continuing in smaller settings, according to individuals who have been invited to such meetings.

In the recording of the investment pitch reviewed by the Journal, Ms. Zhang addressed the steps Chinese authorities have taken to limit cryptocurrency trading on the mainland.

“China has banned initial coin offerings,” she said, referring to sales of virtual currencies by companies and startups looking to raise funds. Her elaboration was a blend of fact and fiction: “China didn’t invent ICOs. That was the United Nations. ICOs have a lot of scams. Not like us. We have lots of real assets,” according to the recording. Initial coin offerings were first introduced around 2013 by privately run digital currency platforms, not the United Nations.

Ms. Zhang’s sales pitch closely matched an online presentation that was circulated to the meeting’s attendees and other potential investors, which was also reviewed by the Journal.

The Chinese-language presentation described an entity called IBA Global Business Alliance which purportedly had port and logistics facilities in Shanghai, Los Angeles and Hong Kong. To finance its operations, IBA devised a “wealth currency” called REC that could be transferred easily across borders and that has appreciated sharply in the last two years, according to the presentation.

It is unclear if there is actually such a thing as a REC currency. Attempts to reach Ms. Zhang were unsuccessful. A website that appeared to be IBA’s indicates the entity is owned by Guangzhou Aibijia Internet Technology Ltd., a company incorporated in July 2015 in China’s southern city of Guangzhou.

That website carries an animated video similar to the one on the cryptocurrency presentation. Inquiries to the company were directed to an executive assistant who initially confirmed the existence of a REC digital currency program. In subsequent phone calls, the assistant said Guangzhou Aibijia’s chief executive wouldn’t respond to questions and said she was unsure if the company was still accepting investments for the REC program.

Ms. Zhang said in her presentation that investors could purchase different types of REC investments, in amounts ranging from $3,000 to $100,000. A portion of their money would be invested into something called “R-coin,” which was described as a bitcoin-like currency.

The presentation took investors through the history and workings of bitcoin, and said this investment opportunity would have similar potential. Bitcoin prices have fallen in the weeks since China’s crackdown, but are still up more than 600% over the last 12 months.

In a five-minute video embedded in the online presentation, the words “only rises, does not fall” appeared as subtitles during a description of bitcoin’s sharp appreciation. During the meeting at the golf club, Ms. Zhang repeatedly said investors could realize a 40-fold gain on their money in two to three years, according to the audio recording.

One individual who attended the early September seminar said he went home afterward, skeptical of the presentation, and took a nap. When he awoke, there was voice message on his phone from another investor.

“One person from our group has already put in $100,000,” the voice message said. “Have you invested yet?”
Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!