Regulators in China have issued a warning on what they called Initial Miners Offering, a new investment scheme that some in China’s crypto community have started promoting on since last October. One of such tokens is Literally Traffic Coin (LTC) which regulators have warned may be an ICO in disguise.
Since the emergence of LTC, a number of other companies have launched the same model of miners coin, causing regulators to have waded in to ensure that it is not a circumvention of the ban on ICO.
Another Initial Miners Offering (IMO) that is getting increasingly popular in China is Lianke. This has been presented to investors as a mining activity they could buy into, however, the details are such that regulators are designating it a financial activity even though the company has been promoting it through what they described as mining charts.
Companies such as Xunlei were mentioned in the statement made by NIFA as one of those that were behind IMO which the financial regulatory agency has described to be a definite ICO in garbs. China is known not to condone the breach of law and the violators may likely be prosecuted if there is conclusive evidence that they have breached the Chinese ICO ban.
The National Internet Financial Association statement released on Friday said that these new schemes must be approached with caution and that they are no less risky than ICOs which the government is determined not to have in China. The National Internet Financial Association of China is the self-regulatory agency tasked with issues such as the control and monitoring of internet based investment schemes such as ICO.
This latest warning by NIFA comes on the heels of the earlier warning by a number of government ministries on ICO last September in what was called ‘Notice on ICO’ that highlighted the illegitimacy of the cryptocurrency based crowdfunding. The notice described ICOs as being unauthorized to issue certificates, bonds, and securities.
The latest statement warns individuals and organizations not to get involved in ICOs and IMOs which by the way have been classified as financial activities whose purpose is to circumvent the ICO ban.
The agency further called on individuals to approach all forms of financial investments with vigilance since it has become obvious that there are people who would break the law to make money. The emphasis was on any form of token sale which NIFA said that the public should report to the police or relevant authorities. “That a company is offering an ICO from overseas to Chinese does not necessarily mean that the company is based abroad, it may still be a Chinese company deploying foreign servers to sell digital token to Chinese, such criminal violators of the law must be reported for necessary sanctions”, the statement read.
The association advised the public to engage in what it called self-regulation and resist the urge to get involved in any form of digital token offerings in a press release that possibly had many investors wondering how to sift out what to invest in from what is banned. The Chinese ban on ICO and digital token is a sure bitter pill to a large thriving crypto community, no wonder there are people who would stop at nothing to exploit any loopholes in the ban.