A Chinese government-backed industry organization has published a report on fake cryptocurrencies. As of April, its monitoring platform has found 421 fake cryptocurrencies, 60% of which are deployed overseas. The Committee has also outlined major red flags of these cryptocurrencies.
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421 Fake Cryptocurrencies
The National Committee of Experts on the Internet Financial Security Technology (IFCERT), a Chinese government-backed industry organization, published the results of its analysis on fake cryptocurrencies on Friday.
Citing that “In recent years, virtual currencies represented by bitcoin, litecoin, ethereum, etc. have received continuous attention,” IFCERT pointed out that “some criminals are engaged in financial fraud or pyramid schemes under the cover of virtual currency.” The Committee added that fake cryptocurrencies frequently appear, “causing investors to suffer major losses.”
IFCERT’s National Internet Financial Risk Analysis Technology Platform continuously monitors fake cryptos, the Committee detailed, elaborating:
As of April 2018, the technology platform has found 421 fake virtual currencies, of which more than 60% of fake virtual currency website servers are deployed overseas. Such platforms are difficult to find and difficult to track.
The Red Flags
The Committee outlined some major red flags of these fake cryptocurrencies. Firstly, they adopt “pyramid-based” business models, claiming that their cryptocurrencies will generate high returns.
Secondly, they have no real code, IFCERT described, noting that they either do not have a blockchain or cannot generate blocks for one.
Thirdly, they will not be traded on legitimate cryptocurrency exchanges, “so they often trade on over-the-counter or proprietary exchanges,” the report detailed, adding that:
There is a phenomenon that prices [on these platforms] are highly controlled by institutions or individuals, which tends to cause the illusion of rapid price increase. However,
