China's government has advised citizens against the Russian Ponzi scheme founded by Sergey Mavrodi and using bitcoin digital currency, Beijing's online media Caixin reports.

Mavrodi recently claimed that he could influence the whole bitcoin economy because one of his MMM financial schemes, the international structure MMM Global (Bitcoin Republic), operates solely in bitcoin. The MMM website is popular in China and has allegedly driven large amounts of cryptocurrency. In November Mavrodi expressed confidence that it was the popularity of MMM that caused the uprise of bitcoin price.

This statement of the MMM founder drew the attention of officials, including the Russian Federal Service of Financial Monitoring. The head of the service Oleg Markov addressed China's government predicting collapse of the MMM scheme in the country.

According to some investors, the MMM accounts went frozen on 25 December 2015 without warning and are still inaccessible for users as of 19 January. There are rumours that the scheme has collapsed.

The central government of China stated in an official announcement that Mavrodi's scheme is operating illegally in the country. The warning was published by the central bank, banking regulator, Ministry of Industry and Information Technology and State Administration for Industry and Commerce. The organisation is unlicensed in China and presents risks for investors, according to the officials. None of the MMM websites is registered with the government or have their servers located in the country. For this reason the police refused to investigate the case.

In 1989-1995 Mavrodi operated the MMM scheme in Russia, which reportedly reached 10-15 mln participants. He was sentenced to 4.5 years in prison for financial fraud by Russian authorities in 2007. Mavrodi started a new scheme in China about a year ago. The official notice warns the public that Mavrodi is an ex-convict.

Sonya Belova