Shenzhen Warns Residents of Fraudulent Stablecoin Investment Schemes

Shenzhen authorities have issued a warning to residents about fraudulent investment schemes involving digital assets and stablecoins. The city’s Office of the Municipal Task Force for Preventing and Combating Illegal Financial Activities published a statement on July 7, cautioning against deceptive platforms that pose as legitimate crypto investment opportunities. These platforms exploit public enthusiasm for digital assets, using terms like “stablecoins,” “virtual currency,” and “digital assets” to promote false investment opportunities.

These fraudulent groups employ flashy advertising to lure victims into illegal activities, including pyramid schemes, gambling operations, fraud, and money laundering. The statement emphasized that such schemes violate China’s financial regulations. Most of these organizations are unlicensed and are illegally raising funds from the public, leaving investors with no protection against financial losses.

As a result, the city urged investors to avoid offers that promise unrealistic returns and to report suspicious platforms. The statement advised, “If you find that relevant institutions are engaged in illegal fundraising in the name of investing in stablecoins, please report it to the non-leading department of the city or district or the public security department in a timely manner. The relevant departments will verify the reported clues, crack down on them according to law, and reward the informants according to regulations.”

Shenzhen’s warning comes amid a global rise in stablecoin adoption, with demand growing in both emerging and developed markets. Stablecoins, which are digital assets pegged to fiat currencies like the US dollar, have gained popularity for offering price stability in volatile markets. This utility has made them a go-to option for users looking to store value or transact across borders.

The stablecoin market is primarily dominated by US dollar-pegged tokens. Chinese companies such as JD.com and Ant Group have reportedly expressed interest in developing CNY-pegged stablecoins. This move aims to increase the Chinese yuan’s international use. However, authorities in the US are also working on further entrenching the dominance of dollar-based assets. US lawmakers recently introduced a new bill aimed at regulating and promoting stablecoin innovation. US Treasury Secretary Scott Bessent recently stated that the regulation would allow dollar-linked stablecoins to exceed a $2 trillion market cap.