Fake Stablecoins Flood Chinese Market, Authorities Issue Warning

Crime

Fake Stablecoins Flood Chinese Market, Authorities Issue Warning

Authorities in Shenzhen have issued a warning over a growing wave of stablecoin scams, with fraudsters exploiting the rising popularity of digital assets pegged to fiat currencies.

These scams are being disguised as financial innovation, using the trust associated with stablecoins to mislead the public into investing in worthless tokens.

Local regulators have identified a number of newly launched projects offering fake stablecoins with no actual reserves. Promising high returns and stability, these tokens are being used to lure investors through unregistered platforms. Behind the scenes, some projects are running Ponzi schemes, laundering money, or linking crypto to gambling activities. Victims are often left without legal recourse once their funds are lost.

Unlike regulated stablecoins such as USDT and USDC, these newer tokens are frequently built without safeguards like fund freezing, and their smart contracts are often vulnerable or designed for “rug pulls.” The government urged users to stay vigilant and report unauthorized fundraising operations posing as stablecoin issuers.

Despite these scams, global stablecoin adoption remains strong. Fiat-backed tokens continue to dominate the market, with a combined supply nearing $250 billion. USDT on TRON and USDC on Ethereum are especially active, powering most trading and DeFi interactions.

In contrast, algorithmic stablecoins have shrunk considerably, with value locked in such assets halving to around $750 million in 2025. Meanwhile, crypto-backed stablecoins have seen growth, reaching $11.3 billion in value—an increase supported by more cautious issuance and improved regulatory clarity.

While the stablecoin market matures internationally, Chinese regulators are taking a hard line on unregulated experiments that put retail investors at risk.

telegram

Author

Alexander Stefanov

Reporter at Coindoo

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.

Source: https://coindoo.com/fake-stablecoins-flood-chinese-market-authorities-issue-warning/