The Securities and Exchange Commission (SEC) has warned the public against digital currency schemes operated by fraudsters.
Digital currency Xian Coin or XNC is not licensed to offer investment schemes to the public but is very active online inviting wannabe investors, Lawyer Giness Marie Teves, legal officer of SEC-Cebu said
“While cryptocurrency is not illegal since the Bangko Sentral ng Pilipinas has regulated the cryptocurrency exchanges, what makes XNC dubious is that it has no SEC registration and it does not have the required license from SEC to solicit investments. Please take note that any corporation who wishes to engage in investment-taking should have a secondary license in order to operate,” Teves said.
In an advisory issued on June 7, the SEC Enforcement and Investor Protection Department (EPD) described XNC as a “Ponzi scheme”.
A Ponzi scheme is a fraudulent strategy where the money from new investors is used to pay “fake profits” to prior investors and is designed mainly to favor its top recruiters and prior risk-takers.
The scheme leads victims to believe profits are coming from legitimate businesses when actually are sourced from other investors.
The SEC-Cebu extension office said the EPD investigation found that Xian Coin convinces would-be prospective investors they will enjoy a high range of price stability and appreciation of value because it is taking advantage of a single and centralized supply chain.