- Shenzhen cautions against illegal stablecoin scams.
- Warning issued by Shenzhen Special Task Force.
- High risk associated with unbacked stablecoins.
Shenzhen authorities issued a warning on July 7, 2025, cautioning the public about illegal fundraising activities related to stablecoins and digital assets.
The warning highlights potential financial losses and the socio-economic risks posed by these scams.
The Shenzhen Special Task Force Office revealed that groups are using terms like “stablecoins” to mislead the public into investing. These entities operate without approval and exploit public misunderstanding. The warning emphasizes the high risk linked to these activities.
The schemes potentially affect new investors who may not recognize the absence of backing for these new stablecoins. Affected individuals face financial losses, as no legal recourse is available. This warning, however, does not impact stablecoins like USDT or USDC.
In a historical context, China has witnessed similar scams involving unregulated digital assets. The current action serves as both precaution and continuation of efforts to curb illegal fundraising. Citizens are urged to report any suspicious activity.
“Monitoring has revealed that some illegal organizations are absorbing funds through methods such as ‘financial innovation’ and ‘digital assets’, misleading the public’s insufficient understanding of stablecoins … leading the public to participate in trading speculation, disrupting the economic and financial order, and fostering illegal fundraising, gambling, fraud, pyramid schemes, money laundering, and other public crimes…”
— Shenzhen Special Task Force Office for Preventing and Combating Illegal Financial Activities, Government Body, Shenzhen, China
Market reaction indicates heightened caution, spurred by awareness of the warning. Future outcomes may include tighter regulations on digital assets. Analysts anticipate more stringent vetting procedures and public awareness campaigns could ensue as measures to combat these scams.
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