Crypto Market– hailed as the future of finance, which like every significant innovation is also plagued by an influx of Fraud and Scam projects.
The Chinese Law enforcement has busted another classic instance of a fraud cryptocurrency project for allegedly soliciting money from investors on fraudulent claims.
A provincial government organ in China, Guangdong Daily, Chinese Police arrested six individuals who made fraudulent claims of selling a cryptocurrency which was backed by a commodity, churning out $47 million from as much as 3,000 Chinese investors.
The company, name PEB, was formed in Shenzhen, in January 2017, issues a blockchain-powered token dubbed Pu’er Coin, as per the official report.
The interesting fact about this scam stems from the idea of ‘commodity,’ they claimed to be in their stock, i.e., Pu’er Tibetan Tea, which the firm claimed was worth billions of dollars.
Further profits to investors were leveraged on its exchange in a secondary market called Jubi.com, while another website claimed to provide a 12% annual return to investors for a locking period of 12 months.
As per the official police records, though the firm had an insufficient amount of the tea in stock, they claimed a high short-term return to investors at high-end roadshows and social media promotions, exploiting get-rich-quick phenomena in crypto industry.
Although this bust may not be surprising since the firm had received a warning and fine of $20 million last month from China’s State Administration for Market regulation, for false claims in an advert with false claims of having massive stockpiles of the Tibetan tea.
They were also manipulating the secondary market with its funds to drive up the token price twentyfold over the year 2017.
This bust marks another noteworthy crackdown on crypto fraud in China as law enforcement in the country have beefed up efforts to battle illegal fundraising.