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Possible Exit Scam? China’s Investors Lost Over 100 Million Yuan in This All-in-ONE Crypto Dapp

A Chinese man claimed to have been duped into investing in an alleged crypto scam, losing a total of 2 million yuan (about $300,000). The cryptocurrency project known as OneChain amassed hundreds of millions of yuan from thousands of investors through an initial coin offering (ICO) last year, according to a recent report from Chinese news portal Chinatimes.net.cn.

The man from China’s northwestern Shanxi Province, known by his surname Hu, poured 2 million yuan into Ethereum(ETH) in early 2018 and exchanged ETH for the token, ONE, which is issued by a Beijing-based blockchain startup, hoping to profit from the ever-evolving world of cryptocurrency.

The crypto project which presents itself as an all-in-one decentralized application (DApp) that combines a chat platform, a decentralized exchange(DEX) and a digital asset wallet all in a single service disappoints its investors.

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The blockchain company in April 2018 issued the ONE token with a total supply of 10 billion tokens and its 10-day-long ICO raised over 100 million yuan (about $16 million) in total. According to Mr.Hu, the issue price of ONE is around 0.1 yuan based on the exchange rate of 1 ETH = 5100 ONE at the time.

However, OneChain soon shows signs of a crypto scam. Firstly, it promised investors high returns. A team member told more than 2,000 investors in a chat group on Tencent’s messaging service QQ that the price of ONE would rise to at least 2 yuan, and investors possibly got a 100% return on ONE investment. Secondly, the token has very few use cases. Mr. Hu said the ONE token was only circulated on its decentralized exchange and was difficult to find a buyer.

Investors’ investigation even confirms that the company seems to be a “ mom-and-pop store”. The founder, Kenny Huang, a senior technical adviser at the major crypto exchange Huobi and  an early participant of Bitshares, contributes 250,000 yuan to the company, owning 62.5% of shares, while his wife Mei Yan controls the remaining 37.5 percent of shares with 150,000 yuan contributed capital.

The company stopped updating twitter which has 414 followers on December 4,2018, and WeChat account in July 2018.

In addition to ONE, the company also reportedly issued at least 5 other digital coins. It also promised airdrops or free coins, and to return 80 percent of transaction fees to investors in ONE tokens.

The purported crypto scam has not been busted by law enforcement in China. Mr. Hu has reported the potential crypto scam to Beijing police, but city-and district-level public security organs dismissed it. He even filed a complaint with Beijing Municipal Bureau of Finance, the city’s petition office and the government service hotline ‘12345’ , but so far he has yet received response from authorities.

OneChain’s founder Kenny Huang refused to respond to any question from Chinatimes.net.cn, but asked the reporter to check with financial regulators whether his project is a scam or not.

At present, the price of ONE goes to zero and investors are highly likely to lose their entire investment.

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