The People's Bank of China (PBC), the country's central bank, and two other agencies issued a notice on Wednesday, warning investors of fraud and pyramid schemes using the name of the central bank-backed digital currency, Digital Currency Electronic Payment (DC/EP).
According to the notice, some lawbreakers set up a so-called "DC/EP learning group," claiming that the DC/EP is now jointly promoted by commercial banks and private institutions. They claimed that if investors buy and successfully promote the digital currency to their friends, they will receive "two layers of benefits" from private institutions.
Those lawbreakers will abscond after collecting investors' capital, the PBC said.
Another type of fraud involves institutions disguising digital currency products as central bank-backed DC/EP, and luring investors to trade such products on digital asset trading platforms.
Also, some cases of fraud involve sending links to investors via messages, claiming that the links will allow people to register for DC/EP. Consumers need to top up a designated bank account to be qualified for the registration, according to the notice.
The PBC warned the general public against downloading any purported digital yuan app except from official channels.
"Digital yuan is legal tender that is equivalent to banknotes and coins. Any mention of using digital yuan to make money, return money or participate in digital yuan exchange is all fraud," the notice read.
China has launched multiple public trials of DC/EP in cities including Shenzhen, South China's Guangdong Province, Suzhou, East China's Jiangsu Province, Beijing, and Chengdu, Southwest China's Sichuan Province so far.