24th June, Shenzhen-BTC38, the Shenzhen-based cryptocurrency exchange, released a warning to investors of potential ICO scams. ICOs are going rampant in the last two months. There are quite a number of ICO projects named with “Chain” circulating in the socializing tools like QQ or Wechat group, some of which could not be found in any websites and could only be accessible to so-called insiders. This creates another illusion for newbies or “jiucai(leek)” in the Chinese cryptocurrency community: the fast-track for getting rich is not available for everyone and better to get on board ASAP. Meme mocking ICO: Jiucai Coin, an Eth-based Jiucai harvesting system (source:internet) BTC38 released a statement to disperse rumors concerning recent ICOs that promote using the name of the exchange. TLDR version of BTC38 announcement: 1. BTC38 will not list any newly-issued ICO assets. It’s one of the principle of BTC38 not to be the first exchange for any cryptocurrency or assets. 2. BTC38 has never been and will not get involved in the market-making of exchange and staffs are not allowed to get involved as well. 3. BTC38 will publicize plans and open bidding for “renovating coins”. The announcement also warns investors of fake Wechat or QQ chat log to fool the investors, which is echoed by Yunbi : “In order to protect the benefit of the investors, YUNBI hereby declares: YUNBI will not promise to list any of the tokens from the ICO projects before the ICO ends. Any blockchain startups using YUNBI’s name to do advertisement, their behaviors would be considered as infringing acts. YUNBI will use legal means to ask for their accountability.” As pointed out by Biqushi, 10x inflow of cryptocurrency investors are observed recently compared to that of last year as of 20th June. Summary of new investors as of 20th June. credit:biqushi Tempted by stories like : The Crazy World of ICOs: 200,000 CNY to 6 Million CNY in 2 Years , the newbies are busy trading instead of educating themselves and doing due diligence research. In a report released in April by Chinatimes, one of the mainstream media in China, ICO has been more or less described as “raising fund without viable products and institutional backing” and a “shortcut for grey fundraising”. The story cited QTUM as a “deception to outsiders and investors”. Despite that the authority may implement “regulatory sandbox” for ICOs, , it’s still too early to say that exception could be made amid the crackdown on illegal fundraising. The tolerance for ICOs may come to a sudden halt in China. According to a legal interpretation from a lawyer, illegal fundraising may face death penalty in China . ICO may help blockchain startups to get much-needed funding for quick establishment and exploration of uncharted area in the realm of blockchain, which are generally helpful to the whole ecosystem. On the other hand, the lack of self-discipline and the lurking scammers may do much damage to the latest fundraising methods.
An influx of novice Chinese investors seeking to profit from initial coin offerings (ICOs) is being targeted by a growing number of ICO scams. In response, Chinese exchanges BTC38 and Yunbi have clarified their trading practices and put a halt to listing newly issued ICO assets. The two exchanges, which are both based in China, announced on Monday that they would no longer list new tokens or coins created through ICOs until the end of September.