Chinese Fitness App Under Fraud Investigation

A cryptocurrency fitness app from China has reportedly been charged with fraud. The app company has been placed under investigation for allegedly conducting financial fraud and illegal fundraising methods.

On December 18th, new source Nikkei Asian Review reported on the subject. There they cited document they acquired through KrASIA, their partner publication.

False claims made

The market regulator in Changsha, is currently investigating the fitness app for fraud. The app named “Qubu” had promised users to be rewarded through new cryptocurrency “candies”, as an incentive for activity within in the app.

Users of the app were promised the ability to earn 15 candies, by simply walking 4,000 steps a day for 45 days. These candies could then be exchanged for money, or unlock additional features within the app, which promised increased rewards.

The app’s candies have been marketed to the public as “wealth management instruments”. Offering an advantageous return of a 36.8% return over a short 60 day period. The scheme of investment encouraged users to recruit additional app users through referrals. Allowing a user to obtain additional income in candies. The Qubu app reported having 95 million users download and register to the app by the start of December.

Nikkei made note that this figure was suspicious. He pointed out that in order for Qubu’s claims to be true, about 1 in 10 mobile users from China would need to be registered.

Outrageous fees charged within the fitness app

When a user would conduct a trade within the Qubu in-app exchange, processing fees for transactions were reported to be as high as 25–50%.

An investor reportedly told KrASIA that they had spent 15,000 yuan (around $2,150) in the Qubu app, with expectations of seeing great returns. Although following the regulator’s actions, his funds are now trapped in limbo.

Qubu, which was based in Changsha, has now reported to have relocated to the southwestern Chongqing region of Chinese.

Chinese regulators clamping down

The country of China’s official media has been cautioning the public to remain “rational” following China’s President Xi Jinping public endorsement of blockchain technology back in October. Encouraging citizens to avoid anything that seems to be associated with crypto trading.

In the last month at least five cryptocurrency exchanges in China have suspended their operations in response to Beijing’s anti-crypto stance resurfacing. Some reports even make the claim that these recent developments are “the biggest cleanup” in the Chinese cryptocurrency sector since Beijing’s historic Bitcoin (BTC) ban in September 2017.

