Qubu, a Chinese cryptocurrency fitness app, has reportedly been placed under investigation for allegedly illegal fundraising practices and financial fraud.
On December 18, it has been reported by Nikkei Asian Review that the documents are ostensibly accessed by KrASIA, its affiliate publication.
According to the report, the market regulator in Changsha, the capital of Hunan province, is investigating a fitness app that promised to reward users with cryptocurrency “candies” in exchange for being active.
However, by clocking 4,000 steps a day for 45 days, users of the app could purportedly earn 15 candies, which could then be traded in for cash or used to unlock app features promising higher rewards.
Likewise, the candies were purportedly marketed as “wealth management instruments” with a lucrative offer of a 36.8% return over a 60 day period. The investment scheme urged users to recruit further app users “downline” to earn extra income.
It has been analyzed that Qubu purportedly claimed to have on-boarded 95 million registered users by December of this year.
However, Nikkei notes this figure with suspicion by pointing to its implication that almost one in 10 mobile users across China would need to have been registered for this claim to be true.
Qubu fitness app scandal throws light on China's blockchain scamshttps://t.co/95W64N406L — Nikkei Asian Review (@NAR) December 18, 2019
Similarly, one investor told that he had spent 15,000 yuan ($2,150) through Qubu in expectation of seeing a solid return, yet was now in limbo in light of the regulator’s actions.
It has also been analyzed that Qubu formerly based in Changsha has now allegedly claimed to have relocated to the southwestern Chinese municipality of Chongqing.
Thus, trading on Qubu’s in-app exchange reportedly carried transaction processing fees of as high as 25–50%.