Chinese Industry Group Exposes Web3 & DeFi ’High-Return’ Traps: Same Old Ponzi Engines in Crypto Clothing
Web3's wolves are wearing new sheepskin—but their teeth still look familiar.
China's National Blockchain Committee drops a truth bomb: Those 'revolutionary' DeFi yield farms? Just Ponzi schemes with fancier jargon and blockchain buzzwords slapped on.
How to spot the wolves:
- Returns too good? Probably fake. The math never works long-term—ask Bernie Madoff's cellmate.
- 'Decentralized' teams refusing doxxing? Red flag. Real builders have LinkedIn profiles.
- Tokenomics that reward early investors from latecomers' deposits? That's not innovation—that's a pyramid with extra steps.
Meanwhile, traditional finance snickers from the sidelines. 'At least our Ponzis come with champagne and yacht parties,' whispers one hedge fund manager between cigar puffs.
Past frauds inform current rhetoric
PlusToken is a wallet service that collapsed in 2019, and gathered about 200,000 Bitcoin (BTC) and 9 million ethereum (ETH).
The amount was worth more than $4 billion at 2020 prices, making it one of the largest Ponzi schemes using crypto buzzwords.
The episode demonstrated how promoters can migrate coins across exchanges and mixers before liquidation, pushing enforcement into a multi-year pursuit.
Notably, China banned direct crypto-to-fiat exchange services in 2021, yet domestic interest persists via offshore platforms and grey-market on-ramps.
Regulators in Beijing, Shanghai, and Shenzhen have each released at least one consumer notice on token scams this year.
Potential reasons for the warning
Retail speculation has accelerated on mainland social platforms where an unofficial “stablecoin concept” stock index has risen 88% since April, as Reuters reported.
Market interest also tracked Hong Kong’s incoming stablecoin rules, due to take effect August 1, as large technology firms explore renminbi-pegged tokens.
Reports also surfaced that domestic blogs have begun promoting “USDT mining pools” and “insured CNH stablecoins,” prompting local regulators to prepare enforcement actions.
BIFA’s statement concludes by publishing its hotline and recommending that investors who identify unlicensed activity report it to the police or financial supervisors.
The association adds that it will forward credible tips to provincial task forces that track unlawful public fundraising.
