Chinese Authorities caution against metaverse-related fraud

The Chinese government is sending out a note of warning to her citizens regarding the metaverse and the risks associated with it, this move is coming after the nation previously banned cryptocurrency trade and mining.
Chinese Authorities caution against metaverse-related fraud
Chinese Authorities caution against metaverse-related fraud

The Chinese Banking and Insurance Regulatory Commission has issued a public warning against fraudulent metaverse initiatives. The notification explained how the metaverse’s popularity had made it a prime target for scammers and fraudsters looking to raise money unlawfully in the name of such initiatives and defraud people of their hard-earned money.

The official warning outlined four different methods that fraudsters are making money illegally by leveraging the metaverse as a ruse.

Projects promising high-tech integration, such as artificial intelligence and virtual reality support, is the first and most typical types of hoax. These ventures frequently entice investors with the promise of large returns. The crooks then make off with the money from the investors.

The second most popular type of metaverse scam is blockchain play-to-earn (P2E) initiatives, in which scammers promise large returns in exchange for investing in a local gaming currency and then disappear with the money once they hit a predetermined goal.

Another common strategy employed by such initiatives is to inflate the value of metaverse real estate in order to drive panic buying among users.

The Office of the Inter-Ministerial Joint Conference on Illegal Fund Raising Disposal has asked the general people to be more alert of such programs and to report any suspicious activity to authorities. According to a Google translation of the official warning:

“The fraudulent activities under the banner of “Metaverse”, which is more attractive and deceptive, and participants are prone to property damage. The public is requested to enhance their awareness of risk prevention and identification capabilities, and beware of being deceived.”

Despite a total ban on the usage and mining of cryptocurrencies in China, the government has relaxed its stance on nonfungible token initiatives and the metaverse.

This is why tech behemoths such as Tencent, Huawei, and Alibaba have hurried to register metaverse trademarks. Shanghai’s five-year development plan includes the usage of blockchain and metaverse for public services.