The Chinese government is cracking down on the scams and pyramid schemes plaguing poorer parts of the country . Virtual currencies and peer - to - peer networks are being blamed for the surge in financial fraud , though local Chinese banks have also fallen victim to dubious pyramid schemes in the hope of quick returns . The high cost of living and housing both contribute to the growth of pyramid schemes , according to David Shih , an expert at the University of California San Diego .
The Chinese government is cracking down on the scams and pyramid schemes plaguing poorer parts of the country. Virtual currencies and peer-to-peer lending are being blamed for the surge in financial fraud, though local Chinese governments have also fallen victim to dubious investment schemes in the hope of quick returns. The high cost of living and housing both contributed to the growth of pyramid schemes, according to Victor Shih, China expert at the University of California San Diego.