Cryptocurrency is a huge Ponzi scheme, Blockchain-based Service Network (BSN) — the developer behind China’s state-backed blockchain infrastructure — said on Sunday. 

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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.

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