China’s Banking and Insurance Regulatory Commission has issued a common public risk warning against fraudulent metaverse projects. The warning highlighted how the buzz around the metaverse had made it a prime target of scammers who illegally collected money in the name of such projects and robbed people of their hard-earned money.
The official warning highlighted four different ways scammers are illegally making profits by using the metaverse as the premise of their fraud. The first and most common form of scam includes projects that promise high-tech integration, such as artificial intelligence and virtual reality support. These projects often attract investors by promising high returns. So the scammers get away with investor funds.
The second most common form of metaverse scams are play-to-earn (P2E) blockchain projects, where scammers promise high profits to invest in the native game token and often run away with the funds once a set goal is achieved. Another prominent scheme such projects use includes the real estate metaverse hype to induce impulse buying among users. The Office of the Joint Interministerial Conference on Disposal of Illegal Fundraising has asked the general public to be more aware of such projects and to report any suspicious activity to the authorities.
Despite a general ban on the use and mining of cryptocurrencies in the country, the Chinese government has shown greater relaxation towards cryptocurrency projects. token not fungible and metaverse. This is why several tech giants including Tencent, Huwaei, and Alibaba have rushed to file the metaversi brands. Shanghai has even included the use of blockchain and metaverse for public services in its five-year development plan.