Cryptocurrency is a huge Ponzi scheme, Blockchain-based Service Network (BSN) — the developer behind China’s state-backed blockchain infrastructure — said on Sunday.
See related article: China’s BSN to launch overseas public chain without crypto support
Fast facts
- Crypto is an old hoax in a new form, Zhiguang Shan, chair of BSN Development Alliance, and Yifan He, chief executive officer of BSN developer Red Date Technology, wrote in a commentary published in the party-run People’s Daily on Sunday.
- Shan and He said that many in the industry guarantee high returns to raise money but rely on new members to pay off existing investors.
- Many crypto projects rely on sales and marketing instead of operations as fresh funds are needed to sustain the scheme, the two said.
- They also criticized move-to-earn and play-to-earn projects, calling them phishing schemes that hook users.
- The strong comments from BSN reflect Chinese authorities’ overall attitude toward cryptocurrency, which the country banned in September.
- State-run newspaper Economic Daily last week warned of the risk of Bitcoin falling to zero amid the recent market crash.
- Just last week, financial regulators in Shenzhen said they would “prevent further risks” in crypto trading and that staff of Chinese crypto exchanges overseas could face legal action.
See related article: Law can’t cover crypto losses, China court reiterates
