“Bitcoin is the greatest pyramid scheme in history” – China criticizes crypto

The Chinese government, known for its criticism of cryptocurrencies, seems to be celebrating the current crash of the asset class, with an influential blockchain expert in the country now even describing Bitcoin & Co. as a fraudulent “pyramid scheme”.

Yifan He, the CEO of Red Date Technology, one of the lead firms involved in the development of the state-owned Blockchain Service Network (BSN), has published a related article denouncing the allegedly fraudulent nature of cryptocurrencies.

The article was published in the pro-government newspaper The People’s Daily on Sunday. It states quite boldly that Bitcoin (BTC) and other cryptos are “arguably the greatest Ponzi scheme in human history”.

To support this claim, the author cites, among other things, the spectacular collapse of the blockchain project Terra and the associated cryptocurrencies LUNA and TerraUSD (UST) in May 2022. The expert also rates the new trend of “to-earn” – i.e. crypto projects that reward their users monetarily for certain behaviors, including move-to-earn or play-to-earn – as a mere “phishing strategy”.

In his criticism of Bitcoin, the BSN chairman brings forward well-known arguments that Microsoft founder Bill Gates or investment guru Warren Buffett have tried in the past.

Accordingly, He himself would never invest in crypto and explains to Cointelegraph: “Currently, all non-regulated cryptocurrencies, including Bitcoin, are pyramid schemes in my view, which entail different levels of risk depending on market capitalization and number of users.”

Accordingly, the BSN chairman does not own a crypto wallet or cryptocurrencies: “I do not touch them and I will not touch them in the future, even if they are regulated, because in my opinion they simply have no value at all.”

It is therefore not surprising that He is heavily critical of El Salvador. For example, the small Central American country that introduced BTC as an official means of payment “urgently needs basic financial knowledge”, unless the government’s declared goal was “to rip off its own population”.

For all his smack on bitcoin and altcoins, the Chinese blockchain expert sees certain positive innovations in the crypto market, provided they are properly regulated. For example, He suggests that backed stablecoins like Tether (USDT) and USD Coin (USDC) are not Ponzi schemes:

“USDC and USDT are cryptocurrencies designed for payments, not speculative products. Once they are fully regulated, they are perfectly fine.”

The CEO of Red Date Technology had already spoken out in favor of stablecoins in 2020 and even planned to integrate them into the BSN in 2021. However, these plans were rejected by the Chinese central government.

He’s fierce words are part of an apparent strategy for China to use the crypto market crash as an opportunity to justify the many bans against the domestic crypto industry. Regardless, the country continues to be one of the leaders in Bitcoin mining.

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