Chinese Firm Reportedly Nets $18 Million in 'Questionable' Token Sale

Despite China's 2017 ban on ICOs, a Chinese firm still appears to have openly promoted a token sale that reportedly raised $18 million.

AccessTimeIconJun 4, 2018 at 11:00 a.m. UTC
Updated Dec 10, 2022 at 9:44 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

A Chinese healthcare firm has reportedly raised 120 million yuan ($18 million) by issuing a custom cryptocurrency, despite China's 2017 ban on initial coin offerings (ICOs).

According to an Investor China report on Monday, the company involved – called Zhaoyun Group and apparently based in Hangzhou – focuses on the healthcare and scientific research industry. While the company's official website does not include any information about an ICO, posts on social networkshttps://www.jianshu.com/p/a26f7751de52 and forums indicate that the company launched a token sale on April 8.

According to the posts, Zhaoyun Group targeted the issuance of 170 million of its own ERC-20-based (an ethereum standard) tokens, dubbed Trillion Cloud Gold (TGCG), 10 percent of which were sold through a public offering.

from etherscan.io, the website that tracks transactions on the ethereum blockchain, shows that all the tokens were created in mid-March 2018, but that no transactions were made thereafter.

Through conversations with promotors in the token sale's WeChat groups, the report indicated that the public offering raised the $18 million through a tiered distribution system wherein members receive a return on their investment by attracting additional investors to purchase the token.

The report went on to call the firm's conduct "questionable," given that it could have violated China's notable ban on ICOs, while the firm's business model appears to "very similar" those seen in pyramid and Ponzi schemes.

The reported ICO comes at a time when Chinese authorities have stepped up its efforts in cracking down on crypto-related fundraising activities, as well as on those that use the concept to fleece investors through pyramid schemes, as previously reported by CoinDesk.

At press time, Zhaoyun Group had not responded to a CoinDesk request for comment.

Marbles image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.