Four Chinese regulatory and administrative bodies Monday released a risk alert about the MMM Social Financial Network and similar financial network platforms that are not registered with commercial authorities, saying that these organizations may involve in illegal fund raising and pyramid selling.
The China Banking Regulatory Commission (CBRC), the Ministry of Industry and Information Technology (MIIT), the People's Bank of China (PBOC) and the State Administration for Industry and Commerce (SAIC) said these platforms labeled themselves with "mutual financial assistance" to attract investors with ultra-high yields are greatly risky.
According to the alert, a Russian convicted criminal Sergei Mavrodi was found guilty in 2007 of creating a pyramid scheme called MMM and of defrauding 10,000 investors out of 110 million rubles, about 4.3 million U.S. dollars at the time.
He served in jail for four years and six months and restarted the practice in 2011. The four authorities warned that the MMM promotion website came into China from abroad illegally and there is possibility that it transfer funds raised out of China. Investors should stay away from investment scheme of this kind.
Latest comments