China’s NFT market plagued by complaints of fraud and price manipulation

China’s state administration for market regulation has received several complaints concerning price manipulationand scams in the non-fungible token (NFT) market. 

Scams and price manipulation complaints skyrocket China’s NFT market

Buyers in China swamped the country’s major regulator with complaints about fraud and price manipulation in 2022 amid the hype around NFTs. The official complaints increased by 30,000% to 59,700 from 198 in 2021.

The majority of complaints were about not receiving things after making a purchase, refund problems, high transaction fees, and price manipulation, according to the social media account of the state administration for market regulation on March 14.

China’s watchdogs also revealed related data at last year’s World Consumer Rights Day event. Now, the latest report on the NFT market comes a day before World Consumer Rights Day in China, an annual occasion where media and authorities highlight instances of market abuse. 

NFT market operated by Tencent Holdings to cease operation

According to Huanhe’s mobile app, released on March 9, the regulated NFT market operated by Tencent Holdings in China will shut down in June and has begun refunding its consumers. Due to compliance issues, some Chinese NFT platforms are relocating their operations to Hong Kong.

Transactions in NFTs or digital collectibles are still legal despite China’s prohibition on cryptocurrency trading. The financial risk posed by NFTs is criticized by the state media and regulators, while businesses and decision-makers work to realize the economic potential of the new asset class.

As a result, China’s domestic NFT market is mainly self-regulated by the industry, which restricts secondary trading, even as an underground industry of NFT speculators emerges. 

The lack of regulatory certainty caught the attention of the country’s two sessions government during March 4-13. A Chinese parliament member then suggested creating a legal definition for digital collectibles as well as a regulatory framework for the sector.

Source: nft.news