Chinese Regulators Target 3 Crypto Projects in Pyramid Scheme Crackdown

Chinese authorities have escalated their regulatory focus on fraudulent cryptocurrency schemes, particularly those operating as pyramid structures, with intensified investigations into unregistered platforms suspected of deceiving investors [1]. As of August 2025, enforcement actions have concentrated on several projects based in Shenzhen, which are accused of mimicking legitimate investment vehicles to lure retail participants with promises of high returns [2]. These schemes often mislead investors by falsely claiming affiliations with well-known financial brands, capitalizing on the public's growing interest in crypto while operating outside the bounds of official oversight [3].

The crackdown reflects broader efforts to preserve market integrity and investor confidence, especially as digital assets continue to attract both institutional and retail attention. Officials have emphasized the importance of public awareness in identifying and avoiding fraudulent operations, encouraging investors to remain cautious and skeptical of overly optimistic returns [4]. Authorities have not indicated that legitimate blockchain innovation is at risk, instead highlighting a strategy that targets only those platforms operating without proper registration or engaging in deceptive practices [5].

The GMCE investment platform, which has attracted widespread attention across China, has also come under regulatory scrutiny. While no arrests have been made in China yet, officials in the Maldives have confirmed that GMCE has been classified as a pyramid scheme, with legal actions now underway in that jurisdiction [2]. This cross-border investigation illustrates the increasing collaboration between different regulatory bodies in identifying and curbing fraudulent schemes that exploit digital anonymity and jurisdictional gaps.

The move aligns with a global trend of heightened scrutiny on unregulated crypto activities, as seen in recent U.S. cases where individuals faced significant prison sentences for orchestrating large-scale digital asset frauds [3]. These developments reinforce the need for stronger oversight in an industry that remains largely decentralized and opaque.

Although the Chinese government has not disclosed the full scale of its operations, the targeted focus on three specific crypto projects suggests a measured and precision-based enforcement strategy [4]. Analysts suggest that this approach can help restore public trust by clearly differentiating between legal and illegal uses of blockchain technology, while avoiding broad suppression that could stifle innovation [4].

As the crypto landscape continues to evolve, regulators face the challenge of maintaining investor protection without hindering technological progress. The recent actions in China highlight the growing capability of authorities to detect and respond to complex financial crimes operating under the guise of decentralized finance. The ongoing investigations signal a more proactive and coordinated approach to safeguarding investors, aligning with global efforts to enhance transparency and accountability in digital asset markets [1].

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Source:

[1] https://www.ainvest.com/news/chinese-authorities-target-3-crypto-projects-pyramid-scheme-probe-2508/

[2] https://etruth.mv/category/news/

[3] https://cryptodnes.bg/en/news/cryptocrime/

[4] https://www.nytimes.com/topic/subject/banking-industry?page=4