The Chinese banking regulatory body issued a warning against risk and fraud in the Metaverse after the Chinese government banned crypto trading and blockchain activities.
The concerns and worries of the government’s perceived fraud in the Metaverse were necessitated by the increased activity and projects. They believe that Metaverse’s growing influence can attract fraudsters who initiate projects and programs that can scam individuals and investors and make them lose a lot of funds.
The Chinese authority described the Metaverse as both flourishing and deceptive, stating that investors unfamiliar with the complex system are likely to lose their money while taking the associated risks.
Methods of Fraud in the Metaverse
Consolidating their fears of risk in the Metaverse, China’s banking regulatory body, in their official statement, elaborated four possible ways fraudsters are illegally raking in lots of profits from the Metaverse.
First, the introduction of high-tech projects like artificial intelligence, machine learning and virtual reality projects in the Metaverse, with promising high returns, attract investors who invest their funds and get duped by the waiting fraudsters.
The second instance is premised on the Play-to-Earn (P2E) online gaming projects where investors are lured into investing in the native gaming token, but in the end, fraudsters run away with invested funds.
According to the regulatory officials, one other fraud technique used by fraudsters in the Metaverse includes exaggerating the Metaverse to induce investors into buying non-existing digital assets.
In another twist, the Chinese Inter-Ministerial Joint Conference on Disposal of Illegal Fund Raising consolidated the risk alarm by the Chinese Regulatory Body.
A statement accredited to the body mentioned above warned the general public of the implications of the fraudulent activities carried out in the name of the Metaverse, which is both deceptive and attractive and lures investors to lose their funds. Investors must be more careful and risk-conscious while carrying out investment activities in the Metaverse.
The Asian Giant and the Metaverse
Regardless of the restrictions on crypto trading in the country, the Chinese government is complacent on the issue of using non-fungible tokens and the Metaverse within its territories.
Interestingly, China’s high-tech companies such as Alibaba and Huwaei have filed a metaverse trademark application to the government. In its five-year plan, China’s most populated city, Shanghai, is exploring means to invest in the Metaverse and utilize its supporting technologies in its public services.
The above statement issued by Shanghai’s Municipal Commission of Economic and Information Technology confirms the acceptability of the Metaverse and blockchain as one of the four ways to achieve china’s 14th five years’ development plan.
Despite the Chinese banking regulatory body’s efforts, the Metaverse activities have continued to gain wide acceptance among investors and some powerful governments like some states in the United States of America, Russia etc.
Various digital and virtual projects are being invented and initiated in the Metaverse. The risk and incidence of fraud notwithstanding, digital currencies have attracted large support from the community of blockchain users.