China Warns Against Fundraising Scams in the Metaverse
As the Metaverse gains momentum in China, the country’s banking and insurance authority has raised alarm about an increase in fraud cases.
China’s banking and insurance authority has issued a warning to investors about firms that are illegally fundraising through the Metaverse.
China’s banking and insurance regulator is attempting to tighten down on funding for Metaverse projects.
According to a Friday notification from the China Banking and Insurance Regulatory Commission, unknown entities are “fabricating bogus Metaverse investment projects” and making misleading promises about their ability to absorb public money. The warning especially warns against two enterprises it suspected of selling the Metaverse storey in order to generate money illegally: the Metaverse Investment Project and the Metaverse Chain Tour.
According to the regulator, fraudsters swindle investors by building buzz around the Metaverse and “luring participants into investing via the exchange of virtual money.” The regulator continued by highlighting further categories of illicit fundraising, including virtual currency and digital real estate.
While the term “Metaverse” is used loosely today, it alludes to the future generation of the Internet, one in which users will be able to communicate, play, and work in virtual environments. Crypto enthusiasts think that blockchain technology will undergird a large portion of the future Metaverse by providing a mechanism for users to earn tokens for their activities. China’s warning comes amid a surge in global interest in the Metaverse from businesses and investors. The Metaverse excitement began to accelerate in October, when Facebook announced its rebranding as Meta, with Mark Zuckerberg claiming that the company’s new goal would be “to assist in bringing the Metaverse to life.” Following the announcement, Metaverse initiatives such as Decentraland and The Sandbox saw their native coins surge and rare plots in virtual worlds price millions of dollars.
Additionally, the Metaverse has gained traction in China’s private technology industry. Numerous multinational technology companies have their headquarters in the country, including Tencent, NetEase, ByteDance, and Alibaba. In China, the Metaverse is not too cryptocentric, owing to the country’s ongoing crackdown on the sector. As a result, controlled Metaverses based on virtual and augmented reality, social networking, and gaming have exploded in popularity. There is even a state-backed industrial association dedicated to the field.