The bottom of the digital asset trading platform chaos: “attraction” hidden scheme propaganda like pyramid scheme

Digital asset trading platforms have been mixed up for some time, and chaos has occurred frequently.

The bottom of the digital asset trading platform chaos: "attraction" hidden scheme propaganda like pyramid scheme

The mountain rain is coming to fill the building.

With the frequent price spikes and drops in digital currencies and the frenzied speculative atmosphere, the chaos and even criminality surrounding digital assets has caused great concern. A few days ago, bitcoin trading was again “blocked” by commercial banks is one example.

The China Securities Journal reporter recently found that digital asset trading platforms have been mixed for some time, and chaos has occurred frequently: some trading platforms treat the elderly as “harvesting objects”, and the “attraction” scheme is suspected of pyramid schemes; some trading platforms and The “single teacher” cooperation, investors “hooked”, with technical means to make investors damaged; there are trading platforms have been reduced to cross-border “money laundering” tools, to avoid foreign exchange regulation and so on. Experts interviewed by the China Securities Journal pointed out that these trading platforms have seriously damaged the rights of investors, and strengthening regulation is urgent.

From the mania of riches to the tragedy of being “harvested”
Digital currency is an alternative currency in the form of electronic money. At present, there are two mainstream digital currencies in the market: one is the central bank digital currency launched by the central banks one after another, assuming the function of legal tender; the other is the private cryptocurrency represented by Bitcoin, which is more regarded as an investable digital asset and has become the object of speculation on the trading platform.

“If the daily trading volume of the trading platform reaches 10 billion yuan, each shareholder will get at least 2,800 yuan in dividends every day! The future wealth is unlimited!” A few days ago, at a meeting of the digital asset trading platform “SPS Exchange”, a reporter from China Securities Journal felt a manic atmosphere permeating the scene, as if the opportunity to get rich overnight was within reach.

During the meeting, the speaker passionately encouraged investors to invest in the HHS coin, a digital asset issued by the trading platform. However, can pie really fall from the sky?

The China Securities Journal reporter contacted Xiao Chen. When it comes to this encounter, Xiao Chen has a stomach full of bitterness. In October last year, Xiao Chen’s mother invested in HHS coins issued by SPS Exchange under the guidance of a person claiming to be the head of Hashington Blockchain (Shenzhen) Co.

“At that time, my mother borrowed tens of thousands of dollars from me, and at first I didn’t ask her much about what she was doing with the money. The company’s main business is the development of the company’s business. Xiao Chen told China Securities Journal that the money his mother had invested earlier was no longer available for withdrawal.

Although Xiao Chen repeatedly cautioned, his mother still believed in the “SPS exchange” and was looking forward to a surge in the value of the coins in her hands. Now there is serious antagonism within the family, and Xiao Chen is quite helpless.

The dark night runs wild and chaos abounds
China Securities Journal reporter learned that there are at least 600 operating trading platforms around the world, in these platforms, all kinds of digital assets “you sing, I’m on stage”.

However, these trading platforms are of varying quality, and many of them are running wild in the dark, hiding chaos that makes people shudder.

What happened to Xiao Chen’s mother was a “diversion” scheme, and Hashton was the so-called “diversion” company. A member of Hashton told China Securities Journal that after investing in HHS coins, you can become a member of the “SPS Exchange” and if you develop enough downlines, you are expected to become the original shareholder of the trading platform.

This “headhunting” method is similar to pyramid schemes, relying on the rise of digital currencies to lure users and expand the market by developing downlines, which has a strong penetrating power. A screenshot provided by Xiao Chen to the China Securities Journal reporter shows that in addition to Shenzhen, Hashton has also expanded its business to Guangzhou, Foshan, Changsha, Wuhan and other places, only Xiao Chen’s county-level city investors WeChat group of more than 400 people.

In addition to “attraction”, “with a single” behind the scheme is also alarming. The so-called “with a single”, is “with a single teacher” to guide a currency buy, sell points, guide users in the trading platform trading. A self-proclaimed “BTA Exchange” cooperation “single teacher” Li Ming (a pseudonym), he will provide users with a certain currency trading strategy, guide users in the designated trading platform to follow the single transaction, frequent ” The company’s main goal is to provide a short term solution to the problem. Li Ming told reporters that his team’s “single teacher” up to 50 people.

The “single teacher” can really follow the stable profit? The answer is undoubtedly no. Not only that, Yu Jianing, the rotating chairman of the blockchain committee of the China Communications Industry Association, pointed out that in some cases, the “single teacher” will lead customers to the black trading platform for trading, at first the black trading platform will allow users to earn a small profit, and later will use the refusal to deal, high level of forced closing, extreme market can not operate, and even shut down and run In addition, there are also trading platforms that are suspected of illegal fundraising.

In addition, there are also trading platforms suspected of illegal fund raising and reduced to money laundering tools. A typical case of punishing money laundering crimes jointly released by the Supreme People’s Procuratorate and the People’s Bank of China in March shows that Chen Moubo issued coins by opening a trading platform, delaying or even refusing investors’ withdrawals, allegedly raising funds for fraud and absconding abroad. His wife, who helped him transfer the fund-raising fraud money abroad, was found guilty of money laundering.

The regulatory sword needs to be sheathed urgently
The regulation of digital asset trading platforms still faces many difficulties. First, it is difficult to regulate legal entities. Originally registered trading platforms in the mainland have been “overseas”, there are certain obstacles to supervision. Some victims also reflected that they do not know the geographical location of the trading platform and the responsible person, and are caught in a situation where they have no way to complain.

Secondly, tracking transactions is also a major problem. Song Jiaji, director of Guosheng Securities Blockchain Research Institute, said that the decentralized nature of digital assets makes the trading platform only a place for aggregation, and it is often difficult to track users once they withdraw their money. In addition, the rapid iteration of digital asset technology, especially the emergence of decentralized finance, is making it difficult to regulate within the original technical framework.

In addition, there are no mature regulatory rules for reference globally. Ding Feipeng, director of the criminal department of Beijing Shanghuang Law Firm, said that the regulatory policies, rules and attitudes of trading platforms vary from country to country and region to region, and there is no universal standard yet, and most of them are at the stage of exploration and experimentation. For example, Singapore, Japan, the United States, Malaysia, Switzerland and the United Kingdom are regulated by issuing licenses, while Hong Kong, China, adopts a regulatory sandbox model, and some countries even have no regulation.

In fact, a broader consensus is forming to strengthen the regulation of virtual currency trading.

On the one hand, improving laws and regulations and regulatory mechanisms is a top priority. According to Yu Jianing, the legal status of digital assets and trading platforms should be clarified, regulatory standards and supervisory responsibilities should be determined, and a perfect access and exit mechanism should be established, etc. The regulator should supervise the operation capability and risk control ability of the trading platform, and require the trading platform to disclose the shareholders’ qualification, financial capability, business scope, financial rules, security management and other related contents, as well as to review the capability and creditworthiness of the builder of the trading platform.

At this stage, several industry insiders pointed out that the regulatory sandbox is a desirable model. The so-called “regulatory sandbox” is a moderately simplified access standards and processes by the regulatory authorities, allowing trading platforms to conduct business tests under a limited business license, using a real or simulated market environment.

In the industry’s view, this inclusive and prudent model, while cracking down on unscrupulous trading platforms, also gives room for the survival of compliant trading platforms, which helps establish and lead the industry standards in the digital asset sector.

On the other hand, the management of the technical application level is strengthened. “The anti-money laundering management, asset security management and other capabilities of trading platforms should be strengthened, and the daily transactions of trading platforms should be monitored through data analysis and other technical means to identify, assess and continuously monitor money laundering risks, and also gradually explore escrow, multi-party co-management or insurance mechanisms for digital assets to strengthen auditing.” Ding Feipeng said, “For risky contract transactions, reference can be made to futures trading, and the leverage ratio of the trading platform can be strictly limited.”

It is worth mentioning that as the public’s enthusiasm for investing in digital assets rises, investor education has a long way to go. Ye Gengqing, a lawyer at PCG Law Firm, suggested that investors should sharpen their eyes and strengthen their understanding of the underlying applications of digital assets, as well as strengthen their prevention of illegal and irregular activities and report relevant clues in a timely manner to guard against fraud.

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