Another cryptocurrency project has been busted by law authorities in China for allegedly soliciting money from investors with fraudulent claims. According to Guangdong Daily, a provincial government organ in China, authorities in Shenzhen arrested six people Monday who allegedly defrauded 3, 000 Chinese investors out of $47 million by promoting a cryptocurrency they promised was endorsed by a commodity. The six suspects formed a company based in Shenzhen known as PEB, which beginning in January 2017 issued a blockchain powered token dubbed Pu’er Coin, in accordance with the report. The project’s web site says buyers of the token are eligible to maintain a contract representing ownership of a certain sum Tibetan tea Pu’er the company has in stock, which it asserts to be worth billions of dollars.
Whilst the token could be then exchanged into a secondary marketplace called Jubi.com, another web site claims the contract may also bring a 12 percent annual return if investors decide to lock their funds for 12 months. In accordance with the police investigation, although the company had only a very restricted quantity of the tea in stock, it promised large short term returns to investors in social networking promotions and roadshows at high end resorts. The authorities said that the project succeeded in bring a substantial number of investors by manipulating the secondary marketplace with its own funds to drive up the token’s price twentyfold in the course of 2017.
In fact, this week’s crackdown might not be completely surprising as the company has received a warning and a nice late last month from China’s State Administration for Market Regulation, whose mandate is to ensure fair and only marketplace competition. The jurisdiction fined the company $20 million to disseminating false claims in an advertisement that touted its allegedly massive stockpiles of the Tibetan tea to back the token. The arrest marks another noteworthy suppression of alleged cryptocurrency fraud in China as law enforcement from the nation have beefed up efforts to battle illegal fundraising. As previously reported by CoinDesk, authorities from Xi’a have arrested the creators of an alleged nationwide cryptocurrency pyramid strategy that’s thought to have amassed $13 million from over 13, 000 people. Police image via Shutterstock. The leader in blockchain information, CoinDesk is a media store that strives for the highest journalistic standards and adheres to a strict set of editorial policies. CoinDesk is an independent subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.