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Hong Kong Monetary Authority (HKMA)

Someone hacked China’s central bank mailbox to email a bogus notice about bitcoin crackdown

A mailbox at the Hefei branch of the People’s Bank of China, the Chinese central bank, was hacked, and a bogus email was sent from the address, according to an official.

PUBLISHED : Wednesday, 07 February, 2018, 12:56pm
UPDATED : Thursday, 08 February, 2018, 11:25pm

Bogus press invitations have been distributed to US media organisations claiming that the Hong Kong Monetary Authority (HKMA) and People’s Bank of China (PBOC) are about to jointly introduce new measures to crack down on “all aspects and services of bitcoin trading in both mainland China and Hong Kong”.

The email said the PBOC and the HKMA will announce a new anti-money-laundering regulatory framework in Beijing on February 14, to be officiated by the Chinese central bank’s deputy governor Pan Gongsheng, to extend the crackdown to “all virtual currency services and activities of both individuals and business including market makers, mining operators, trading platforms and wallets”.

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No such event has been scheduled, according to spokespeople at the monetary authorities in both Hong Kong and Beijing.

The invitation, seen by the South China Morning Post, was sent via email from an address with the suffix @pbc.gov.cn, which could easily be mistaken as authentic because it is in keeping with the email protocol used by China’s central bank. Emails sent to the address were returned with replies greeting journalists, with a registration form attached for the February 14 briefing.

The owner of the mailbox, an official working at the Hefei branch of the Chinese central bank in Anhui province, said he had no idea about the message that was sent from his address, adding that his email had been hacked.

The bogus invitation could be a ruse by traders seeking to profit from a further decline in cryptocurrencies including bitcoin on the futures market, analysts said.

Tighter regulations, or merely the threat of them, have been one of the factors that has caused the price of bitcoin to plunge this year. 

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Bitcoin and other cryptocurrencies are often targeted by scammers spreading fake news. Last year, the price of Ethereum, another cryptocurrency, dipped after false rumours of the death of its founder, Vitalik Buterin, circulated online. The price of bitcoin also spiked last year following bogus reports that Amazon.com would accept payments in bitcoin on its online shopping site. 

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The objective of the bogus email’s senders was to spread rumours and panic, in the hope of manipulating the price of bitcoin, after taking short positions on bitcoin futures and betting that the price of bitcoin will fall, said Leonhard Weese, president of the Hong Kong bitcoin association. 

“I’m not sure it always works, but especially when they can make use of mistranslations and ambiguities, I’m sure they can spread a bit of panic,” he said. The ruse is effective “especially in an immature market with a very low barrier to entry, and where there are many day traders who might be manipulated that way,” Weese said. 

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Regulators in Hong Kong have followed a more relaxed attitude to bitcoin and cryptocurrencies than their peers on the Chinese mainland and in South Korea. 

The HKMA’s current stance is that bitcoin is a digital commodity, and can be traded like other commodities, though they have repeatedly warned about the associated risks. 

Yesterday, the price of bitcoin fell as low as US$5,922 before bouncing back to US$7,076 in New York, according to Bloomberg composite pricing. 

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The fall came amid two high profile interventions by regulators. 

US Securities and Exchange Commission Chairman Jay Clayton told the Senate Banking Committee that he may seek legislation to improve oversight of virtual currencies like bitcoin. 

Agustin Carstens, the general manager of the Bank for International Settlements, often described as the central bank for central banks, described bitcoin as “a bubble, a Ponzi scheme and an environmental disaster.