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

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