Matters that Need Attention in Preventing Illegal Fundraising

 

 (1) The Financial Industry is a Franchise Industry and Must be Licensed

Financial licenses as commonly known refer to the licenses of relevant institutions approved by the national financial regulatory authority to engage in specific financial business, issued by the People’s Bank of China, the China Banking Regulatory Commission, and the China Securities Regulatory Commission. The financial services that can only be carried out with permission include banks, insurance, trusts, securities, futures, financial leasing, public funds, and third-party payments. Asset management business belongs to the category of financial business, which must be licensed to operate, and must be included in financial supervision. Residents with financial management needs should choose asset management products issued by licensed financial institutions such as banks, trusts, securities, funds, futures, insurance asset management institutions, and financial asset investment companies. Without the permission of the financial supervision and administration department, no non-financial institution or individual may sell the asset management products as an agent.

 

 (2) Is It Reliable to Invest in “Virtual Currency” and “Blockchain”?

Under the banner of “financial innovation” and “blockchain”, some lawbreakers absorb funds by issuing so-called “virtual currency”, “virtual assets” and “digital assets”, infringing on the legitimate rights and interests of the public. Such activities are speculations on the concept of blockchain to illegally raise funds, MLM, and fraud, instead of really basing on blockchain technology. They mainly have the following characteristics:

1. Obviously networked and cross-border. Relying on the Internet and chat tools for transactions and using online payment tools to receive and disburse funds, the risk spread is wide, and the spread speed is fast. Some lawbreakers have rented overseas servers to build websites, carrying out activities for domestic residents, and remotely controlling the implementation of illegal activities. That some individuals claim in the chat tool group that they have obtained investment quotas for overseas high-quality blockchain projects and they can help for investment, is most likely fraudulent activities. The funds of these illegal activities mostly flow overseas, making it rather difficult to monitor and track.

2. Strong Deceptiveness, Seduction and Concealment. Using hotspot concepts for hype, and making up a variety of “superior” theories, some also used the celebrities’ platform propaganda, with the airdrop of “candy” as a temptation, declaring that “the currency value only rises and does not fall”, “the investment period is short but with high returns and low risks” are highly confusing. In actual operation, criminals illegally make huge profits by manipulating behind-the-scenes manipulation of so-called virtual currency price trends, setting profits and withdrawing thresholds. In addition, some criminals also issued tokens under the names of ICO, IFO, IEO, etc., or used the IMO method to conduct virtual currency hype under the banner of the sharing economy, which has strong concealment and confusion.

3. There are a variety of illegal risks. Through publicity, criminals use “static gains” (credit gains and profits) and “dynamic gains” (development off-line profits) as bait to attract the public to invest capital and lure investors to join in, continuously expanding the capital pool , With illegal fund-raising, pyramid schemes, fraud and other illegal behavior characteristics. Such activities take “financial innovation” as a gimmick. The essence is a Ponzi scheme that “borrows the old from the new”, and it is difficult to maintain the funds for a long time. The general public is requested to view the blockchain rationally, do not blindly believe in the promise of smallpox, establish a correct currency concept and investment concept, and effectively raise the risk awareness; you can actively report and reflect the illegal and criminal clues found.

 

 (3) Can the Model of Consumption Rebate be Involved?

Recently, some third-party platforms are under the banner of “entrepreneurship” and “innovation”, with “shopping back to capital”, “consumption equals to making money” and “you consume with my money” as gimmicks, promising high or even full refund of consumption money, franchise fees, etc to attract consumers and businesses to invest capital. This kind of "consumption rebate" is different from the normal merchant rebate promotion activities, and there are hidden risks:1. High rebates are difficult to achieve. 2. The safety of funds cannot be guaranteed. 3. There are illegal risks in the operation mode.

 

(4) What are the Kinds of Illegal Fund-Raising in the Pension Field?  

In the name of old-age service and healthy old-age service, some old-age service organizations and enterprises promise high returns in order to collect membership fees and bed fees from the elderly, fraudulently sell “health care products” and other means to implement illegal fund-raising that violates the legitimate rights and interests of the elderly. Crimes such as pyramid schemes have caused serious property losses to the elderly. This kind of activity is different from the normal old-age care service, and there are hidden risks: 1. High rebates cannot be realized. 2. The safety of funds cannot be guaranteed. 3. Health needs cannot be met. 4. The operation mode has illegal risks. According to relevant regulations, the organization of illegal fund-raising should bear corresponding responsibilities and participate in the risk of illegal fund-raising at its own risk. The elderly and their families are requested to increase their vigilance, enhance their awareness of risk prevention and identification, and consciously stay away from illegal fund-raising and pyramid schemes to prevent damage to their interests. If you find clues of suspected violations of the law, you can actively report to the relevant departments.

 

(5) Is “Speculation of Wealth Management” a Reliable Investment Channel?

At present, there are many platforms for domestic users that use the “foreign exchange transaction” as a slogan for financing dividends, which are not reliable. In recent years, there have been many incidents such as the collapse of the foreign exchange wealth management platform, the sudden shutdown or the characterization of MLM fraud. There are four main types of risks. The first category is suspected fraudulent business licenses. The second category is the opaque transaction process. The third category is to use “MLM model” to develop customers. The fourth category is under the banner of “foreign exchange transactions” “sustained high dividends”.

 

(6) What do Individuals Need to Pay Attention to When Investing in Private Equity Funds?

Before investing, it is recommended to go to the website of China Securities Investment Fund Association (http://gs.amac.org.cn) to check whether the private equity fund company is registered and whether the private equity product is on file. At the same time, the purchase of private equity products must meet the requirements of a statutory qualified investor, with the corresponding risk identification and risk-taking capabilities, and the financial assets of the investor should be no less than 3 million yuan or the average annual personal income of the last three years should be no less than 500,000 yuan. The investment amount of a single private equity fund product is not less than 1 million yuan. The total number of people actually investing in this private placement product cannot exceed 200. Private placement products cannot be sold to unspecified objects. Therefore, please pay attention to the following situations:

1. If you bought a private placement product for 50,000 yuan, you must have encountered a scammer;

2. If you received an unfamiliar sales call or text message, or saw a leaflet and then bought a private placement product, it must be a scammer;

3. If someone pulled you for free travel, and then opened an investment report meeting at a resort hotel, and then you would catch a privately-owned happiness ride, which means you must have been fooled!