Chinese investors ‘being misled’ on digital currency fundraising schemes
Initial coin offerings are high-risk due to unclear assets and lack of information disclosure, trade group says
The rise of initial coin offerings in China has disrupted the social economic order and poses a financial risk, a domestic trade group said.
Institutions have misled investors to raise funds through ICOs, according to a statement from the National Internet Finance Association of China, an organisation endorsed by the State Council and top finance and banking watchdogs.
Unauthorised by regulators, some of the ICOs are suspected of fraud, illegal equity offerings and fundraising, the statement said.
“ICO projects have unclear assets, no investor suitability standards and gravely lack information disclosure and therefore have relatively high risks,” it said. “Investors should keep a clear mind, stay on high alert for frauds and report any wrongdoings to the police department.”
ICOs, which have raised about US$1.6 billion, have been deemed a threat to China’s financial market stability as authorities struggle to tame financing channels beyond the traditional banking system. They have also increasingly captured the attention of central banks that see the fledgling trend as a threat to their authority.