Chinese government warns today against 421 fake Cryptocurrencies.
In a government study, the Chinese Ministry of Industry and Information Technology in partnership with IFCERT, the National Committee of experts on the internet financial security technology, has warned against 421 fake cryptocurrencies on the market.
More than 60% of these coins are deployed outside the country, which makes it hard to track the platforms of these fake platforms.
Although I couldn't find the whole list, there are 3 key features by which to identify these cryptocurrencies according to IFCERT .
- Pyramid scheme.
This is a scheme where investors will be promised high rewards if they invest in a specific cryptocurrency or token.
Investors first has to make a payment, and then enroll others in the scheme as well. This is the reward pattern of Digit DGC, a fake coin promising 35%, 40%, 45%, 50%, 55%, 60%.
Everybody knows that such promises cannot be made with real crypto, as the market and crypto are very volatile, as can currently be observed during May.
2.The second: Price increase without dipping or volatility.
The second feature of a fake cryptocurrency is the absence of open source code. Without an open source code the cryptocurrency cannot generate any block nor run on any blocks. The creators keep on splitting the tokens, to create the impression that real wealth is created for the investors.
The result is the price of the token keep on rising without any dips or volatility, which is completely unnatural to the real volatile crypto market. The price of the fake crypto will keep on rising, without ever dipping.
3.Price Manipulation.
These fake cryptocurrencies cannot be traded on legitimate exchanges, they are sold over the counter, or on phony exchange platforms created specifically for these fake cryptocurrencies.
The spikes in price can be manipulated by the scammers, while the investors won't be able to trade or sell their crypto during this period, or even withdraw their money from the exchange,so they can't benefit from these price surges.
This is an example of a fake cryptocurrency VBC and it's exchange Radar China.
The Chinese list of features for fake crypto is similar to the US SEC howeycoin that was created in a fake ICO 2 days ago to warn and help investors recognize fraudulent crypto and ICO's. https://www.howeycoins.com/index.html.
Although the Chinese government say they are not involved in cryptocurrency, it seems they are very involved. This list of fake cryptocurrencies, as well as the earlier ranking of the 28 best cryptocurrencies which differs hugely from the Coin market cap list, is an indication that they are using their own standards to evaluate performance and legitimacy in cryptocurrency and the blockchain.
Cheers for now!