China’s National Audit Office (NAO) warns about the risk of cryptocurrency investment in a recently published article in the magazine of China Audit, disclosing that over 60 digital assets exchanges have manipulated the price of cryptocurrency and cheated investors out of substantial sums of cash.

The warning signals that Chinese authorities continue to step up their efforts in monitoring virtual currency-related activities.

The article stresses that since the birth of bitcoin , a large number of cryptocurrencies have been introduced, especially in recent years. They are always labeled with familiar tags, like “decentralization”, “open source”, “ using blockchain technology”, to lure investors. The wide spread of cryptocurrency has severely disrupted the currency market and causes massive loss of consumers.

Through an audit test of 60 cryptocurrency exchanges, the NAO found that all of them are virtually not equipped with the technology that they previously claimed and the exchange tokens( like Binance’s BNB) do not have currency functions. The so-called market cap of certain cryptocurrency was manipulated by exchanges. These cryptocurrency trading platforms use such schemes to attract investors to join the game which often involves a large number of people and a huge amount of money .

The article states that blockchain entrepreneurs usually use four ways to promote their own cryptocurrencies : First, issue a token with obvious features of a scam; second, token issuers are to fabricate a story and adopt a special marketing mode to attract investors; third, tokens are designed to possess multiple characteristic of crimes; fourth, cryptocurrency-related crimes are closely linked to underground banks.

“Various cryptocurrency projects are just copies of older technologies, like bitcoin and ethereum blockchain, with few new features. Some blockchain projects are named after international organizations and multinational financial groups; some scammers claim that the technology they leveraged in projects is quite similar to that of state-backed digital currency, which is highly confusing.” the article stated.

The NAO also found in this investigation that most token issuers’ bank accounts would quickly transfer capitals they had raised from investors to different bank accounts. And just one account was left for funds to flow in, and the outflows were mostly used in house and car purchases.

In addition to the warning on crypto investment, the article also introduces three audit approaches the NAO adopted in the investigation, including big data analysis, identifying the actual controller behind the blockchain project, and conducting qualitative analysis with certainty.

However, some blockchain experts pointed out that the above-mentioned audit investigation of virtual currency is mainly aimed at ICO frauds which are fundamentally different from mainstream digital assets like Bitcoin and Ethereum.