Despite formally banning initial coin offerings (ICOs) on Chinese territory, the market for ICO services in China continues to draw significant demand. Now Chinese regulators are taking a closer look at this market, scrutinizing companies offering white paper copywriting for ICO projects for as low as $600.
Allegations have surfaced in an article published on Feb 15 by Beijing News, claiming that many of these white paper copywriting services are more than willing to fabricate and falsify information, helping questionable ICOs obtain an air of legitimacy. Essentially, these white paper services may be aiding potential fraudsters in defrauding investors.
An undercover investigation performed by the state-owned news outlet revealed that some of these white paper services are more than willing to help fabricate information. A customer service representative from one of the companies, which remained unnamed, told undercover investigators that the company can include misleading or outright false information about the team’s founders.
Beijing News reported that the representative said that the company can “falsify the education and professional background of these ICO teams. Harvard, Yale, Stanford, Cambridge, Apple, Google, you name it. And we will ensure their profile pictures remain unsearchable on the internet." This type of service may be exactly what ICO fraudsters are looking for.
ICO teams searching for professional white paper copywriting services can find dozens of companies by performing a simple search on Alibaba’s Taobao platform and can receive a legitimate and professional-sounding white paper in as little as several weeks.
Despite the Chinese ICO ban, initiated by the People’s Bank of China in September 2017, many Chinese investors are still trading cryptocurrency and buying tokens from ICOs using services to evade the Chinese firewall, such as virtual private networks (VPNs). According to Xinhua News, an official Chinese media, Chinese regulators aim to clamp down on foreign offerings which are still available to Chinese residents by indirect methods.
As ICOs continue to grow in popularity as a novel way of raising funds quickly, innovative fraudsters are finding new ways of perpetrating scams. Investors looking to participate in ICOs are highly encouraged to practice thorough due diligence in analyzing new opportunities, especially by cross-checking the white paper and team profiles with open information.