For many people involved in the international crypto space, the idea of throwing valuable Ether tokens at comically named blockchain projects in anticipation of unworldly profits now seems a laughable and distant memory, wrote Hope Freiheit in an article for Cointelegraph Magazine.
There is little doubt that what we experienced with the 2017-2018 Initial Coin Offering (ICO) mania was a once-in-a-generation phenomenon, the somber aftermath of which will perhaps live longer in the memory than the euphoria of December 2017.
In hindsight, one cannot help but wonder how investors were naïve enough to believe in all those grandiose claims of blockchains solving every imaginable problem in the world, or how they thought they could get into an ICO token listing early and get out in profit with impeccable timing.
While the crypto industry in the West has seemingly matured since those wild days, with a growing focus on institutions and innovative trading products, the landscape remains quite different in China.
Despite all the lessons learned from 2017-2018 and growing sophistication among retail investors, various crypto-related Ponzis, MLM schemes, and pump-and-dumps are still very much alive in China today. Even for a seasoned observer of the China crypto scene who has seen the recurring themes, this can still be baffling. Considering the magnitude of some spectacular Chinese exit scams such as PlusToken, Wotoken, and the Fcoin debacle, one cannot help but wonder – when will people learn?
Matthew Graham, the Beijing-based CEO of Sino Global Capital, regularly decrypts the Chinese crypto scene for Western Twitter users:
“Although the situation has improved somewhat, it’s unfortunate that scams and Ponzis are still a common feature of the China crypto ecosystem”, says Graham. “Many of these schemes are regional in nature, are associated with veterans of China’s P2P and MLM industries, and feature common players. The largest scams such as PlusToken make international headlines, but there are many more examples. “
He continues, “For instance, an alleged scam called V-Dimension (or VDS) claimed to help users create ‘passive wealth flow.’ VDS marketed itself with a ‘V for Vendetta’ theme, complete with masks and cheesy music and lines. Keeping with the theme, ‘investors’ had to use the Tor network to access the project’s whitepaper. This VDS project even is listed on a fairly popular China-centric exchange, but needless to say it hasn’t gone well.”
Graham’s sentiment is echoed by others who are familiar with the crypto scene in China. Mr Z, a formerly active crypto speculator in Shanghai who asked to remain anonymous, explained that “In China, we often see two main types of scams, one being illegal MLM schemes such as PlusToken, and the other being malicious pump-and-dump ICOs like many of the no-name tokens out there.
“The situation today is already a lot…