Photo: iStock
Photo: iStock

The National Committee of experts on Internet financial security and technology has released a stark warning to remind consumers of potential fraud traps involving fake virtual currencies, reported.

The committee thinks such fake virtual currency platforms mainly involve behaviors such as illegal fund-raising and also hold a high risk of running off, as well as considerable difficulties for defending consumers’ rights.

As of April 2018, the committee discovered 421 kinds of fake virtual currencies, of which more than 60% have set up their website servers overseas.

The main feature of such platforms is to use pyramid-based models to recruit members, claiming that virtual currencies can generate high returns, an inherent aspect of multi-level marketing.

Also, most fake virtual currencies do not have real codes and cannot generate blocks or run on the blockchain. And, they cannot be traded on the virtual currency exchange, so they use over-the-counter trading and the price is highly controlled by the individuals.