China Is Planning ICO Crackdown, Threatens Life In Prison For Crypto Fund Fraud

Earlier this year, Chinese digital currency exchanges temporarily halted customer withdrawals to upgrade their AML controls at the behest of financial regulators. The halt, which lasted for months, caused a temporary chill in the local bitcoin market, causing China to forfeit its position as the world’s largest bitcoin market. Now, Chinese regulators have signaled that they intend to stage a similar crackdown on initial coin offerings, the latest blockchain-related investing craze.  

According to CoinDesk, draft legislation meant to curb so-called "illegal fundraising" includes a provision that targets ICOs.

Here’s more from CoinDesk (translation theirs).

"If the department overseeing illegal fundraising activities found a fundraising without proper permission, or a fundraising that violates the relevant provisions of the State, and if one of the following circumstances is found, the department shall launch an administrative investigation. Other relevant departments shall cooperate with the investigation.

(2) to raise funds in the name of issuing or transferring equity, raising funds, selling insurance, or engaging in asset management activities, virtual currency, leasing, credit cooperation and mutual funds..."

According to CoinDesk, the draft would require the government to establish an interdepartmental committee to combat illegal fundraising. It also clarified that participants of illegal fundraising would be responsible for their own losses. The release of the draft legislation follows widespread outrage directed at cryptocurrency-related scams. Last month, several college graduates in Tianjin, China were found dead after being imprisoned and assaulted by members of a pyramid-selling organization.

Two Chinese laws presently govern how criminal courts handle unlawful fundraising.  According to CoinTelegraph, the crime of illegally absorbing public deposits carries a maximum penalty of 10 years of imprisonment. The crime of fund fraud, meanwhile, carries a maximum sentence of life in prison.

Now the question is, if such heavy-handed penalties are tied to the law currently under consideration, will the law have a chilling effect on the ICO market? Or will it successfully eliminate fraud and abuse?

According to a team of analysts at Pitchbook, ICO have raised more than $1 billion this year, and are expected to raise as much as $1.7 billion. Earlier this month, the SEC ruled that tokens produced in ICOs meet the definition of a security, and therefore must be registered with the commission. Though exactly how ICOs will be regulated in the US remains somewhat vague.

 

Comments

aloha_snakbar Tue, 08/29/2017 - 00:26 Permalink

The Birth of BitconTwo friends, Bob and Satosh are sitting around after an evening of consuming copious amounts of some especially wicked dank. Bob says to Satosh:Hey Satosh... I have a genius ideaYeah, what is it?You know that app you coded...the one that churns out the useless SHA algorithms?Yeah?LOL...lets sell them as digital currencies!Dude...you are fucking wasted, here, have another bongNo, seriously. We get that graphic artist you know create a slick image of a 'gold' coin, and then we can further confuse the rubes by telling them their 'coins' have to be "mined", as if they were real, physical metals!Dude... you are insane! What kind of moron would buy something like that?Bob: Oh... I dont know. Remember that now worthless token you paid stupid money for on WoW?They sit there and stare at each other for a moment, and then both burst out into torrents of tear stained laughterThey are still laughing today.The rest is history==============================================================================================Anyone remember BetaMax? Yeah... me neither...LOL...

Golden Phoenix aloha_snakbar Tue, 08/29/2017 - 05:29 Permalink

The Birth of GoldconTwo friends, Boob and Shittish are sitting around after an evening of consuming copious amounts of some especially wicked dank. Boob says to Shittish:Hey Shittish... I have a genius ideaYeah, what is it?You know that gold we have that's doing nothing but going sideways for years?Yeah?LOL...lets sell it!Dude...you are fucking wasted, here, have another bongNo, seriously. We sell it then invest the profits in something that actually goes up. When our profit doubles we'll buy the gold back for a lower price from the same guys we sold it to!Dude... you are insane! What kind of moron would buy an investment with no return like gold?Boob: Oh... I know! We'll tell them they're 'storing value'! They sit there and stare at each other for a moment, and then both burst out into torrents of tear stained laughterThey are still laughing today.The rest is history==============================================================================================

In reply to by aloha_snakbar

Conax Tue, 08/29/2017 - 01:03 Permalink

They'll squish you with a tank, man.  I wouldn't make a move on their financial turf if I lived in the country. Your momma might have to pay for the round they cap you with.

DelusionsCrowded Tue, 08/29/2017 - 01:24 Permalink

Fools gold as they say . Sheeple can be tricked into just about anything .

Health fads are a great one . Little bit of quasi science , vwola ..

Didn't China have some magic ant craze a few years ago , and authorities had to step in ?
Then there Foolin Gong ; first class ticket to heaven , none of the awkward explanations .

CJgipper Tue, 08/29/2017 - 09:02 Permalink

Fyi, this article is about alt coins, not bitcoin.  It's not surprising that the people missing out on bitcoin can't understand the difference. Now what's interesting is the Chinese are so scared of their own currency that they'd dump money into obvious scams just to get out of yuan, so much so that the government is cracking down on the scams.