Xinhua News Agency: The chaos of virtual currency "leek harvester" needs to be rectified urgently

Xinhua News Agency, Shanghai, May 15. One side is "the myth of wealth", and the other side is "cut leeks".

Since last year, the skyrocketing price of Bitcoin has driven the madness of the entire currency circle. Some celebrities, including Musk, have even become "carriers" of many virtual currencies. Dogecoin and Shiba Inucoin skyrocketed and plummeted amid Musk's "calling orders".

With the rise of currency speculation, investors who lack the ability to discern are becoming the target of hunting. On the one hand, "cottage coins" are popular, and on the other hand, dealers are brutally harvesting. The threat of industry chaos to residents' wealth is increasing day by day. Many people in the industry have appealed that this field urgently needs to be rectified and standardized by relevant departments.

The "senior people" who speculate in coins are getting deeper and deeper

Aunt Meng is 60 years old this year, and she keeps calling herself a "Wei family". In 2018, she began to spend huge sums of money to buy Onecoin.

The administrator of OneCoin told her that OneCoin will become the common currency in the world, and the value of one OneCoin is equal to 10 grams of gold. She was convinced of this.

In 2020, the public security organs and other departments exposed OneCoin's "pyramid marketing + currency speculation" model, but Aunt Meng still stubbornly believes that OneCoin will be a digital currency that surpasses Bitcoin.

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Aunt Meng’s daughter, Xiaoshu, told reporters that her mother joined chat groups investing in Dogecoin, Pandacoin, etc. after she lost all her money in Vikacoin.

"I have helped my mother repay the debt several times over the years, but she still doesn't listen to our advice." Xiaoshu said that Aunt Meng has been speculating in coins for many years, and she invested tens of thousands of yuan in each project. "Every once in a while, I heard her excitedly say that there is a new project, and there will be one every once in a while. She also asks relatives and friends around her to take the lead, and registers virtual currency wallets for the whole family."

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After the money is invested in the virtual currency platform, it cannot be withdrawn. The number of times is too high, and Aunt Meng also understands that this is a fund. But she still backed up, added back, and went in and out of various currency circle groups.

"She was lucky. She told me that as long as she was not the last picker, she could cut other people's leeks. Then she told me that even if 10 items were lost, as long as one item turned over." Xiao Xiao Shu said.

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In the end, Aunt Meng not only lost her life savings of 600,000 yuan, but also took on a large bank loan.

Virtual currency market alarm sounds

Since the beginning of this year, the sharp rise and fall of Bitcoin, Dogecoin, Shiba Inucoin and various niche coins have brought speculation into the vision of many ordinary investors, and brought a series of problems to the surface.

A large number of virtual currency companies issue various virtual currencies under the banner of "virtual currency can make a fortune". Investors who fantasize about getting rich overnight, fall into the illusion woven by dealers and trumpeters, and become victims of "altcoins".

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The "white paper" carefully woven by the project party can become a sickle for harvesting "leeks" in an instant, and the life savings of investors may have become the target of hunting. Virtual currencies such as Radarcoin, KUN, Vulcancoin, etc., attract the elderly to invest by inquiring about their health, taking advantage of the psychology of the elderly who have pensions but dislike low bank interest rates, constantly weave the myth of wealth creation, and lure them to buy "cottage coins" and "air coins". ". Hero Chain (HEC), one of the most popular virtual currencies, has had millions of victims of online fraud and involved more than 300 million yuan in funds.

Wu Haifeng, a researcher at the Chinese University of Hong Kong (Shenzhen) Institute of Advanced Finance, said that there are as many as one million kinds of virtual currencies on the market today, mainly through the issuance of coins, multi-level pull, publicity to let retail investors take over, and large quantities of projects. The chips "cut the leeks" to make a profit.

According to statistics, as of the end of December last year, the global losses due to cryptocurrency fraud were nearly 4 billion U.S. dollars. Fraud methods include "air currency" fraud, social media fraud, encryption hijacking, illegal applications, etc. If not curbed, it is expected that in the future will intensify.

Beware of the imminent "gray rhino"

In addition to various "air coins", cryptocurrencies listed on exchanges have also become "leek" harvesters.

Since Bitcoin hit a new low of $4,705 in recent years on March 13, 2020, the current price of Bitcoin has soared more than 12 times from the low point, and extreme markets continue to be staged. In addition, Dogecoin and Shiba Inucoin also doubled or plummeted in turn under Musk's "flag-waving". People from all walks of life believe that the skyrocketing market contains the risk of "price riots".

Wang Peng, an assistant professor at the Gaoli Research Institute of Renmin University of China, believes that the "information asymmetry" of Bitcoin transactions turns investment into speculation. "Bitcoin itself is subject to the policy supervision and macroeconomic influence of the global central bank and financial system, and there is a lot of hype in the price surge. The market concentration of Bitcoin is very high, and the vast majority of coins are controlled by very few accounts. The clear attribute of being a banker has led to very large fluctuations in the price of Bitcoin. This high-risk asset is not a suitable investment target for individual retail investors." He said.

Wu Haifeng is worried that the "price riots" of cryptocurrencies may evolve into "grey rhinos" among some individual investors and private equity funds.

According to the statistics of the blockchain market website CoinGecko, as of May 10, the total market value of global cryptocurrencies exceeded 2.54 trillion U.S. dollars, surpassing the currency circulation of the U.S. dollar, which was 2.15 trillion U.S. dollars. Among them, the mainstream cryptocurrency Bitcoin only accounts for 18%, and most cryptocurrencies are full of asset bubbles.

"Musk's 'calling orders' on Twitter, and the holdings of Grayscale Fund, the world's largest fund focused on cryptocurrency investment, have become the biggest catalyst in the currency circle, stimulating investors to get together to buy encrypted assets. Joined the army of currency speculation.” Wu Haifeng believes that the entry of private equity institutions has made virtual currency derivatives play a variety of ways, such as contract leverage, ETF, DEFI and other new ways to play frequently, and the ups and downs have become unscrupulous. Once a position is liquidated, the risk may be transmitted from individual investors to financial institutions, posing a threat to financial stability.

In urgent need of rectification and regulation

Industry insiders have issued a warning: virtual currency is becoming a new means of cross-border money laundering. At present, the global virtual currency anti-money laundering situation is grim. According to the 2020 Digital Currency Anti-Money Laundering Report released by the blockchain security company PeckShield, the value of unregulated outbound virtual currencies reached US$17.5 billion in 2020, a 51% increase from 2019 and is still growing rapidly.

Xiao Sa, director of the Bank of China Law Research Association, believes that suspected fraud in the virtual currency chaos can be roughly divided into four categories: fabricating and issuing white papers to absorb funds from the public will be suspected of constituting the crime of illegally absorbing public deposits; fabricating false virtual currency or Those who use the victim's impulse to invest in virtual currency to induce the victim to invest in virtual currency types without development potential will be suspected of committing a crime of fraud; those who use fraudulent methods to illegally raise funds, abscond with money or embezzle funds for the purpose of illegal possession will be charged Suspected of constituting the crime of fund-raising fraud; and the crime of organizing and leading pyramid schemes.

Based on the various risks arising from the currency circle, relevant departments have been increasing their efforts in rectification and supervision in recent years. Xiao Sa believes that the law should be amended in due course or normative documents should be issued to sanction irregular virtual currency projects and hype.

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