Underground Bitcoin Business in China: $10k for Creating a Cryptocoin, Unstoppable Scams
Since the advent of bitcoin, scam coins have been rampant, especially amid crypto rallies. A crypto-related product development company recently revealed that they charge 80,000 yuan (roughly $11k) for creating a crypto coin and that most of their clients run it the way a Ponzi scheme does – attract more investors and run away with their money.
According to an investigation report from local news outlet National Business Daily, the company claims to provide services in crypto coin issuing, mining system development, website design and app development, as well as listing on exchanges. The charge for the package from coin issuing to app development is only 80,000 yuan.
What the “coin founder” needs to do is coming up with a name for the coin and then playing marketing skills. After the app development is completed, the “founding team” will focus all of their energy into marketing and attracting investors to make investments with the promise of high rates of return.
When asking what scam coins they have developed, the person in charge surnamed Wang refused to disclose, saying they have to protect the privacy of his customers. To avoid unnecessary trouble and ensure customer’s privacy, they would deploy the servers outside of the country.
It means these “crypto entrepreneurs” who preach cryptocurrency and talk investors into buying their coins actually have no idea what cryptocurrency or blockchain is. Prior to it, 8btc has reported the business of ghostwriting whitepaper with the charge of 3,500 yuan (roughly $500).
This kind of scams, under the mask of innovative blockchain and cryptocurrency concepts, has spread out rapidly in the country by force of its low cost, little risk and great profits.
Earlier this month, a crypto wallet named PlusToken has reportedly absconded with funds estimated over $3 million worth crypto deposits. It turned out that the wallet, allegedly based in South Korea, was actually developed by a Chinese company and mainly targeted Chinese investors. Though a gang of six Chinese promoters has been recently arrested by Vanuatu police and sent home, it is said the mastermind and key members behind the scam are still at large.
Amid the recent bitcoin rally, the appetite of investors for crypto wealth is coming back, which entices scammers to have a go. Dozens of new cryptocurrencies launch each month and meanwhile dozens of coins turn out to be scams or dead. Investors shall always keep an eye toward caution when looking for new investment opportunities in the crypto space.