Last week, the Banking and Insurance Regulatory Commission in China released a reminder urging the public to beware of illegal fundraising in the name of the metaverse.
Metaverse is a 3D virtual reality space that users can access via virtual reality (VR) goggles to connect, play, learn and interact with each other. According to Mark Zuckerberg, metaverse, also referred to as meta, holds significant potential and will undoubtedly be a part of the future offering ways for users to socialize and collaborate beyond what anyone can imagine. But as with many popular activities, there’s always someone that would ruin the fun for others.
“The public is requested to enhance their awareness of risk prevention and identification capabilities, and beware of being deceived.”
China Banking and Insurance Regulatory Commission
According to the Banking and Insurance Regulatory Commission in China, fraudsters came up with an elaborate scheme, presenting fake metaverse projects for illegal fundraising. The Commission warned the public to beware of such fraudulent projects offering high returns with a small investment. The Chinese authorities pointed out that the metaverse “is more attractive and deceptive, and participants are prone to property damage.”
Additionally, the Commission released detailed descriptions of several methods used by the fraudsters. Hoping of raising awareness, prevent risk and identify lawbreakers, the Chinese authorities urged individuals to report suspected crimes. The latest announcement comes at a time when the crackdown on gambling in China continues. By now, the country successfully ceased cross-border gambling activities. Moreover, Chinese authorities have likely put an end to the once-profitable junket operators.
Fraudsters Use a Variety of Methods
One method used by the fraudsters is presenting fake metaverse investment projects. According to the Commission, fraudsters would use fake projects regarding artificial intelligence (AI), VR and game production related to the metaverse. Those projects are used to defraud citizens of their money.
Fraudsters would also trick users into metaverse blockchain gaming or “making money while playing games.” Similar to the fake investment projects, fraudsters would offer “short investment cycle and high returns.” But ultimately, the users that fall for the trick are defrauded of their money.
Another method used by the lawbreakers to obtain money from the public is by offering “metaverse currency” or other forms of virtual currency. The Commission also warned the users of fraudsters that “use the concept of metaverse hotspots to exaggerate the expectation of virtual real estate prices rising, artificially create the illusion of panic buying, and induce hoarding and trading.”