Chinese Cryptocurrency Platform Collapses, Prompting Concern That It Was Ponzi Scheme

October 23, 2020 Updated: October 23, 2020

A Chinese cryptocurrency trading platform recently collapsed, prompting speculation that the site was running a scam.

On Oct. 15, the platform, Aishang, saw the cryptocurrency traded on its site named Tether plummet from 0.268U (USDT, equivalent to $0.28) to 0.05U within 3 minutes of opening.

Aishang is one of three Chinese crypto exchanges that crashed around the same time, according to local media.

An investor named Liu Qing (alias) told the Chinese-language edition of The Epoch Times that Aishang was a Ponzi scheme. He said that if this was a normal trading site, the low costs to enter the new market would cause a rise, and if there was a fall, it would be a gradual one.

“It’s not like this, where it can directly drop 99.99 percent. This can only be a result of technical intervention, and has nothing to do with the market,” Liu said. “So, 99 percent of people who entered the trading platform did not make any money.”

According to Liu, Aishang claimed that there would be a 4 percent increase in value, which initially attracted Liu to the platform.

“It automatically rises on the platform. Think about it, if you invest a hundred yuan, it will earn four yuan a day,” Liu said. “At the 4 percent rate, your investment will double in 25 days. One million will become two million. So everyone wants to invest in it.”

However, Liu was skeptical of Aishang from the beginning, so he invested very little money.

“Because I do investments, I know that there are more people who disappear with investors’ money in this business. I’ve seen quite a lot, so I just invested a few thousand dollars to give it a try.”

“The digital currency itself is relatively risky,” Liu said. “It does not have the same limit as restricted stocks, and it never stops falling and rising. It can rise a lot or fall a lot. But the price falling on other platforms has never been like Aishang which dropped 99 percent within a few minutes. This is impossible.”

After the crash on the morning of Oct. 15, a large number of investors turned up to Aishang’s operations center in the southern Chinese city of Shenzhen at about 9:30 a.m. The doors to the office were open, but the place was emptied out and no one was there, Liu said.

Liu also rushed to the Futian District Police Station in the city to report the incident that night. He saw a lot of people who came from provinces like Sichuan, Henan and other places to report Aishang’s scheme. There were about one to two hundred people at the station.

Liu said he heard that police on Oct. 18 took in an Aishang team leader but released him after questioning.

Gu Xiaohua and Jiang Feng contributed to the report.

A previous version of this article misstated when the trading platform crashed. The Epoch Times regrets this error.