The National Internet Finance Association of China (NIFA), a self-regulatory organization in the field of internet finance, has issued a warning on “Initial Miner Offerings” (IMO) and related activities.

In September 2017, the People’s Bank of China (PBoC), along with seven ministries, banned all initial coin offerings (ICOs) activities in the country. NIFA said that following the ICO ban in the country, IMO has emerged as “a potentially risky model that warrants vigilance.”

In this context, NIFA noted a number of tokens issued since October 2017 including Lianke, LLT, and BFC Points. It explained that in case of Lianke issued by Xunlei, the issuing company substitutes the token for the duty to pay back project contributors with legal tender, which makes it a financing activity and a form of “disguised ICO.”

The agency noted that Xunlei has lured many citizens without sound discernment into IMO activities with frequent promotional activities and publishing of trading tutorials.

NIFA said:

“NIFA hereby calls on consumers and investors to gain a clear understanding of the nature of relevant models, strengthen awareness of risk prevention, make investments rationally, and refrain from blindly following speculation and hype. Any illegal financial activities in the form of IMO, ICO activities targeting domestic residents through deployment of foreign servers, and exchange services for “virtual currencies”, once found, can be reported to relevant regulatory agencies or NIFA. Any such activities suspected of violating criminal laws can be reported to the police. NIFA members should enhance self-regulation, resist illegal financial activities, and refrain from participating in any activities involving ICO or speculation in “virtual currencies”.”

NIFA was initiated by the PBoC in collaboration with relevant ministries and commissions including the CBRC, the CSRC, and the CIRC according to the stipulations in Guiding Opinions on Promoting the Healthy Development of Internet Finance jointly issued on July 18, 2015.