China Warns About Possible Cases Of Fundraising Scams Using The Metaverse

Following the abolition of cryptocurrency trading and mining in the country, the Chinese government’s next concern is the rise of metaverse scams.

The metaverse is “attractive and deceitful,” and users who are unaware of the risks are more likely to lose funds, said Chinese regulators.

The China banking regulatory body has released a warning to the public about deceptive metaverse investments. The statement emphasized how the popularity of the Metaverse has turned it to a primary target for fraudsters and scammers to illegally raise funds under the guise of metaverse projects only to rob individuals of their money.

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Scam Alerts From Chinese Banking Regulator

The official notice gave four methods through which scammers are illegally making money by using the virtual world as a deceptive tool. Firstly, projects offering high technological integration, like support for virtual reality and artificial intelligence. These ventures usually woo unsuspecting investors with the false promise of large payback. When people finally invest, these scammers eventually run away with the money from the individuals.

The next most famous type of digital scam is the play-to-earn (P2E) initiatives, where fraudsters promise large cash out when people invest funds in the currency of a virtual game and them abscond with the funds thereafter. Another popular technique utilized by these initiatives is to increase the price of digital real estate to bring about panic buying in the user community.

Also, the notification explicitly cautions against two projects: Metaverse Chain Tour and Metaverse Investment Project, which it suspects of selling the Metaverse story to fraudulently raise money.

The Metaverse today, refers to the future generation of technology in which users will be able to communicate, play, and work in virtual environments. Crypto lovers claim that blockchain technology will support much of the future Metaverse by allowing users to earn tokens for their activities. China’s warning comes at a time when corporations and investors across the world are showing more interest in the Metaverse.

When Facebook rebranded to Meta in October, Mark Zuckerberg stated that the firm would focus on a new mission “to bring the Metaverse to existence,” the Metaverse fever skyrocketed. Metaverse companies such as Decentraland and The Sandbox exploded in the crypto sector after the news, with local currencies surging and rare plots in virtual worlds selling for millions of dollars.

China More Lenient Towards NFTs

Although there has been a total prohibition on cryptocurrency utilization and mining in the nation, the Chinese government has demonstrated more leniency toward non-fungible tokens and the digital world. Because of this, multiple tech giants, like Tencent, Alibaba, and Huawei have raced to register for metaverse trademarks. Also, Shanghai’s five-year growth plan has added blockchain technology and the virtual world for public agencies.

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