China Warns of Rise in Metaverse-Related Scams

The China Banking and Insurance Regulatory Commission on Friday issued a warning against illegal fundraising schemes linked to the metaverse.

The warning comes amid a boom in Chinese activity in the digital sector that seeks to combine virtual reality, gaming and social media. Beijing appears to have sanctioned metaverse projects despite the concept’s association with gaming and cryptocurrencies.

China has essentially banned cryptocurrencies and blockchain games that hold tokens.

State-owned telecoms conglomerate China Mobile established the Metaverse Industry Committee last October, while Chinese tech giants such as Tencent Holdings Ltd. and Alibaba Group Holdings Ltd. have filed trademark applications related to the concept in recent months.

“We may be seeing a bifurcation of metaverse technology and virtual asset trading, as we have already seen in the Chinese blockchain industry.said Winston Ma, managing partner in New York at CloudTree Ventures, which invests in gaming, esports and AR/VR technologies.

The regulator does not mention non-fungible (TNF) tokens or blockchain games by name, which could be the intersection of cryptocurrencies and the metaverse, but rather addresses common investment concepts commonly used in these two spaces. .

“Some criminals link metaverse concepts with their projects and introduce the concepts of ‘earn money while playing’ and ‘high returns with short cycles’ to entice people to invest by trading virtual currencies and assets in gamesthe regulator said, noting that virtual real estate is another scheme used by fraudsters.