The latest reports reveal that a Chinese crypto fitness app has been placed under investigation. The app is being investigated for allegedly engaging in illegal fundraising practices and financial fraud.
On December 18, Nikkei Asian Review reported this allegation while citing documents seemingly accessed by its affiliate publication, KrASIA.
The market regulator in Changsha which is the capital of Hunan Province is investigating the app as explained in the report. The app in question promised to reward its users with crypto ‘candies’ in exchange for their being active.
Users of the app called ‘Qubu’ could allegedly get 15 crypto candies by clocking up to 4,000 steps daily for 45 days. The candy could then be traded in for cash. On the other hand, users can allegedly use the crypto to unlock app features promising higher rewards.
These crypto candies were marketed as “wealth management instruments”. They came with a lucrative offer standing at 36.8% return over a 60-day period. The investment scheme further encouraged users to recruit more app users ‘downline’ to get some extra income.
Qubu also claimed that it already has on-boarded 95 million registered users by this December. The report notes the figure with suspicion stating that at least one in 10 mobile users across China must be registered on the platform for the claim to hold any ground.
All trading services on Qubu’s in-app exchange allegedly attracted transaction processing fees of as high as 25–50%. According to one investor who spoke to KrASIA, he had spent 15,000 yuan ($2,150) via Qubu while hoping to get a solid return. However, he was thrown into limbo after learning about the regulator’s actions.
Qubu was previously based in Changsha but has now claimed to have relocated to Chongqing, a southwestern Chinese municipality.
Earlier this year, President Xi Jinping made a seminal public endorsement of blockchain technology. After he did that, the country’s mainstream media has repeatedly warned the public to remain rational while diving into the nascent sector. Moreover, the public is warned to avoid engaging in speculative excesses that are associated with cryptocurrency and digital assets trading.
More than five Chinese crypto exchanges either suspended or terminated operations in November. They did it responding to an observed redoubling of Beijing’s anti-crypto stance. Additionally, some reports claim that recent developments in the industry represent the ‘biggest cleanup’ of the crypto industry since Beijing’s historic clampdown in Sept. 2017.