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Chinese financial watchdog issue warning about fraud threats in the metaverse

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The metaverse is "attractive and deceptive," says Chinese regulators, and users who are unfamiliar with the dangers are more likely to lose funds.

Following the outlawing of crypto trade and mining in the nation, the Chinese government's next focus is the rising quantity of frauds involving metaverse initiatives.

The Chinese Banking and Insurance Regulatory Commission released a public threat alert about fake metaverse projects. The statement emphasized that the hype around the metaverse had rendered it a prime subject for fraudsters and scammers unlawfully collecting funds in the name of such initiatives and defrauding individuals of their hard-earned funds.

The official alert emphasized four distinct methods by which scammers are illegally profiting by using the metaverse as the basis of their scam. Projects claiming high incorporation, like artificial intelligence and virtual reality assistance, are the first and most frequent kind of hoax. These initiatives frequently entice investors by offering huge profits. The scammers then escape with the funds of the investors.

The second most famous kind of metaverse fraud is blockchain play-to-earn (P2E) initiatives, in which fraudsters claim high returns for investing in the native gaming token and frequently disappear with funds once they hit a predetermined target. Another common approach used by such projects is to hype up metaverse real-estate to drive fear buying across users.

The Office of the Inter-Ministerial Joint Conference on Illegal Fund Raising asked the general people to be more alert of such initiatives and to notify officials of any strange activity. According to a Google translation of the official alert:

“The fraudulent activities under the banner of "Metaverse," which is more attractive and deceptive, and participants are prone to property damage. The public is requested to enhance their awareness of risk prevention and identification capabilities, and beware of being deceived.”

Even though there is a complete ban on crypto use and mining in China, the government has been more lenient regarding nonfungible token and metaverse projects. As a result, multiple tech tycoons, including Tencent, Huwaei, and Alibaba, have hustled to register metaverse copyrights. Shanghai's five-year development plan includes the usage of blockchain and metaverse for public services.

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