Chinese Local Government Warns of Digital Yuan Fraud

Xiongan New District warned citizens of telecom fraud using the digital yuan, according to a Nov. 18 notice signed by the local government and central bank branch.

• Fraud cases involving China’s central bank digital currency have been making headlines. Just this week, police arrested a woman for defrauding RMB 300,000 ($40,000) using the CBDC. Earlier in November, another 11 people were arrested in Henan province for using the digital yuan to launder money for Cambodian gangs.
• The use of CBDC to commit fraud undercuts the narrative that digital currencies issued by nation states will be a better, less-prone-to-fraud alternative to crypto. That this is happening in security-conscious China, which has severely cracked down on crypto is bound to engender a certain about of schadenfreude amongst crypto advocates.
• The news could also indicate that China’s CBDC is still not ready for a full rollout as security issues get fixed.
• The Xiongan authorities warned not to use unauthorized sources to download e-CNY apps, not to fall for scammers pretending to be government authorities, or invest in “digital yuan exchanges.”
• Xiongan district, near Beijing, was one of the first places to pilot the e-CNY.
• China is expected to be the world’s first major economy to roll out a CBDC. The digital yuan has been used for $9.7 billion worth of transactions, Mu Changchun, the head of the digital currency research institute at the People’s Bank of China, said on Nov. 3.

Read more: China’s CBDC Has Been Used for $9.7B of Transactions