Fake Stablecoins Flood Chinese Market, Authorities Issue Warning
Authorities in Shenzhen have issued a warning over a growing wave of stablecoin scams, with fraudsters exploiting the rising popularity of digital assets pegged to fiat currencies.
These scams are being disguised as financial innovation, using the trust associated with stablecoins to mislead the public into investing in worthless tokens.
Local regulators have identified a number of newly launched projects offering fake stablecoins with no actual reserves. Promising high returns and stability, these tokens are being used to lure investors through unregistered platforms. Behind the scenes, some projects are running Ponzi schemes, laundering money, or linking crypto to gambling activities. Victims are often left without legal recourse once their funds are lost.
Unlike regulated stablecoins such as USDT and USDC, these newer tokens are frequently built without safeguards like fund freezing, and their smart contracts are often vulnerable or designed for “rug pulls.” The government urged users to stay vigilant and report unauthorized fundraising operations posing as stablecoin issuers.
Despite these scams, global stablecoin adoption remains strong. Fiat-backed tokens continue to dominate the market, with a combined supply nearing $250 billion. USDT on TRON and USDC on Ethereum are especially active, powering most trading and DeFi interactions.
In contrast, algorithmic stablecoins have shrunk considerably, with value locked in such assets halving to around $750 million in 2025. Meanwhile, crypto-backed stablecoins have seen growth, reaching $11.3 billion in value—an increase supported by more cautious issuance and improved regulatory clarity.
While the stablecoin market matures internationally, Chinese regulators are taking a hard line on unregulated experiments that put retail investors at risk.
Alex is Editor-in-Chief of Coindoo and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
