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Cryptocurrency is ‘biggest Ponzi scheme in human history’, Chinese execs from state-backed blockchain drive say
- Executives from China’s Blockchain-based Service Network say Web3 games and cryptocurrencies, such as bitcoin and ether, are investment frauds
- The recent crypto implosion has prompted fresh warnings from state media and authorities in China, where cryptocurrency trading is banned
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Executives at China’s Blockchain-based Service Network (BSN), a state-backed initiative aimed at driving the commercial adoption of blockchain technology, likened cryptocurrencies and popular Web3 business models to investment frauds, after a recent market rout inflicted heavy losses on global investors.
BSN’s Shan Zhiguang and He Yifan called cryptocurrencies “the biggest Ponzi scheme in human history”, propped up by communities that are “trying every means to keep the fraud going”, in an article published in state media People’s Daily on Sunday.
Critics of cryptocurrencies have long compared such digital assets with Ponzi schemes, where scammers use money from new investors to pay earlier investors until the fraud can no longer be sustained. However, proponents argue that bitcoin, ether and their like will be useful in the future if they are adopted on a large scale.
Scepticism over the crypto industry has risen recently following a market crash, which coincided with tightening monetary policies in major Western economies that have led to a global sell-off in a range of risky assets.
Retail investors who bought cryptocurrencies during the market boom last year have suffered deep losses, while a growing number of crypto lending platforms, hedge funds and issuers of stablecoins – a type of cryptocurrency pegged to a government currency like the US dollar or euro – are now mired in financial distress.
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