29.03.2024

Chinese Crypto Fitness App Reportedly Under Investigation for Fraud

According to the report, the market regulator in Changsha, the capital of Hunan province,  is investigating a fitness app that promised to reward users with cryptocurrency “candies” in exchange for being active.

A Chinese cryptocurrency fitness app has reportedly been placed under investigation for allegedly illegal fundraising practices and financial fraud.

Nikkei Asian Review reported the news on Dec. 18, citing documents ostensibly accessed by its affiliate publication, KrASIA.

Investors in limbo

By clocking 4,000 steps a day for 45 days, users of the app, dubbed “Qubu”, could purportedly earn 15 candies, which could then be traded in for cash or used to unlock app features promising higher rewards.

The candies were purportedly marketed as “wealth management instruments” with a lucrative offer of a 36.8% return over a 60 day period. The investment scheme urged users to recruit further app users “downline” to earn extra income. Qubu purportedly claimed to have on-boarded 95 million registered users by December of this year.

Nikkei notes this figure with suspicion, pointing to its implication that almost one in 10 mobile users across China would need to have been registered for this claim to be true.

Trading on Qubu’s in-app exchange reportedly carried transaction processing fees of as high as 25–50%.

One investor told KrASIA that he had spent 15,000 yuan ($2,150) via Qubu in expectation of seeing a solid return, yet was now in limbo in light of the regulator’s actions.

Qubu, formerly based in Changsha, has now allegedly claimed to have relocated to the southwestern Chinese municipality of Chongqing.

Renewed clampdown?

After China’s President Xi Jinping made a seminal public endorsement of blockchain technology this October, the country’s official media has been cautioning the public to remain “rational” and to avoid what is perceived to be the speculative excesses associated with crypto trading.

At least five Chinese cryptocurrency exchanges suspended or chose to terminate operations last month in response to a perceived redoubling of Beijing’s anti-crypto stance, with some reports claiming that recent developments represent “the biggest cleanup” of the cryptocurrency sector since Beijing’s historic rout in Sept. 2017.

Chinese Crypto Investment Firm Asked to Remove London Underground Ads

The U.K.’s financial watchdog has asked a China-based cryptocurrency investment firm to remove adverts for its service from the London Underground.

According to a report from This is Money late last week, the Financial Conduct Authority (FCA) responded to criticism that it had been slow to act after the financial news site reported the ads, saying it had come to an agreement with the firm two weeks ago to take the ads down.

The firm in question, Zeux is reported to have placed ads touting a savings scheme with fixed 5 percent returns. This is Money said it found that the investments were converted into cryptocurrency and send to China for investment there – a fact it said was not stated in the ads.

«While these discussions are continuing the firm agreed on 24 January to pause the sale of the product to new customers and to stop all marketing activity relating to the product, including on their website, social media and public advertising on the transport network of the product in question,» the FCA said in its response.

The news report suggests that the ads are still «widespread» on the London Underground railway system.

The FCA said some ads had been put up before it had spoken to Zeux and that it takes some time before they can be removed «given the size of the network.»

«The firm has agreed to pause the sale of the product to new customers whilst our discussions are continuing,» the FCA added.

Frank Zhou, Zeux founder and CEO, had previously told This is Money that it was working to comply with the FCA request.

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