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A Chinese banking regulator warns of cyber-fraud threats

The metaverse is “attractive and deceitful,” according to Chinese regulators, and users who are unaware of the risks are more likely to lose money.

The Chinese government’s next concern, after banning crypto trade and mining in the nation, is the burgeoning scams surrounding metaverse projects.

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, are the first and most typical type 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 programmes and to report any suspicious activity to authorities. According to a Google translation of the official warning:

“Fraudulent actions are carried out under the banner of “Metaverse,” which is more appealing and deceptive, and participants risk property harm. The general population is urged to improve their risk prevention and detection capacities, and to be wary of being duped.”

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, Huwaei, and Alibaba have hurried to register metaverse trademarks. Shanghai’s five-year development plan includes the usage of blockchain and metaverse for public services.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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