China’s Banking and Insurance Regulatory Commission (CBIRC) has posted a reminder on deceptive fundraising campaigns that pose as metaverse projects.
With cryptocurrencies becoming fully government-dependent in China, multiple crypto investors ventured into other forms of digital assets including NFTs and the metaverse, and so did people with malicious intent.
Based on the report issued by the CBIRC, the General Office named several metaverse scams, naming only a couple of specific projects that were suspected of criminal activities in the digital environment.
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
What is Fantom? | Animated FTM Explainer
The two Chinese projects responsible were reported to be the Metaverse Investment Project and the Metaverse Chain Tour as they were seemingly involved in illegal fundraising and fraudulent activities.
With the prime suspects out of the way, the CBIRC posted four major methods that scammers use to create fake metaverse projects for monetary gain.
The commission claims that most of these projects usually create false Metaverse projects by creating fraudulent road maps, making futuristic metaverse plans, and asking investors to purchase packages from public sales (presumably NFTs) that will eventually go up in price after the project takes off.
Likewise, the CBIRC mentioned metaverse gaming, or play-to-earn, which has been a hot topic for the past several months.
Based on the report, malicious individuals create fictional gaming projects asking people to invest in items that will sooner or later be much more valuable, with the potential outcome being that the creators abandon the project, and run off with the funds.
Another popular metaverse scam that was addressed in the report is virtual real estate that can be purchased as an investment. The CBIRC claims that fake metaverse projects tend to inflate the price of virtual land via hyping up its price, worth, and potential returns in order to trick users into buying usually worthless assets.
Finally, based on the report, some metaverse scammers ask investors to purchase native tokens that have been pumped by the creators. Such investments usually result in rug pulls as soon as the demand for the tokens skyrockets.
There have been several scenarios, similar to those named by the CBIRC, that happened in the past few months.
Just a couple of days ago, the team behind the NFT project Squiggles tried to pump the price of their digital assets by using shadow addresses and purchasing their own NFTs. It was discovered that the same team could have been responsible for about a dozen other NFT rug pulls.
