More digital currency exchanges close amid investigation rumours

Two Beijing bitcoin trading platforms join at least three other major exchanges in notifying clients of a trading halt, amid rumours regulators are seeking their top executives in ‘cooperating with investigation’ of the sites

PUBLISHED : Monday, 18 September, 2017, 9:30pm
UPDATED : Wednesday, 20 September, 2017, 1:12pm

Two Beijing-based bitcoin trading platforms have joined at least three other major exchanges in notifying clients of a halt in trading, amid rumours that Chinese regulators are seeking their top executives in “cooperating with investigation” of the sites.

Huobi and OkCoin announced over the weekend they had been issued with instructions from the authorities to stop providing renminbi-denominated transaction services on all digital assets by the end of October.

Customers can withdraw cash from their accounts and starting from 9.30pm Friday, any renminbi top-up would be automatically rejected or returned, the two said.

The decision echoed a similar one made by Shenzhen-based exchanges Bitkan and ViaBTC as well as Shanghai-based BTC China last week to cease all bitcoin trading in China by the end of the month.

Amid the intensified crackdown, Chinese regulators have also asked executives and major shareholders of the trading sites to assist with further investigations, with some have been advised to “stay in Beijing to help ensure the orderly cleanups [of the system] ” by investors, according to a report carried by Beijing News on Monday, citing source familiar with the matter.

China’s bitcoin gloom may be Hong Kong’s boon as crypto issuers switch to city’s exchanges

Cryptos, a form of virtual currency created using computer cryptography, has been under close regulatory scrutiny after explosive growth raised concerns that a meltdown of the unregulated market could spill over onto the financial markets, and increase instability.

One member of staff at Huobi told the South China Morning Post she had received no information about any investigation into any executives or their whereabouts, whereas OkCoin’s hotline remained unanswered.

On a speech on Friday in Beijing, Li Yang, director general of the National Institution of Finance and Development, used bitcoin as an example of the kind of financial innovation that does not serve the real economy.

“Although labelled as the hi-tech, and able to break away from central banks and offer new pricing and payment standards, bitcoin in fact has no such ability,” Li said

As bitcoin creates financial chaos, he added, it could further jeopardise the stability of macro economy.

Why has China declared war on bitcoin and digital currencies?

Cryptos are not legal tender in China, and the central bank has placed an outright ban on banks or financial institutions holding them, although such regulation leaves room for individuals to own them.

China’s central bank first intensified its action against the cryptocurrency earlier this month with a ban on initial coin offerings (ICO), a practise of raising capital through issuing them, in the form of tokens, much like the issue of shares in stock exchange IPOs.

These were often exchangeable for more established cryptos such as bitcoin or ethers, which can in turn be bartered for products, services, or cash. It went as far as accusing 90 per cent of the ICOs launched on the mainland as fraudulent.

The crackdown has gradually expanded since to domestic trading exchanges of all digital assets.

Bitcoin was trading 8 per cent higher at $3,961 on the Bitstamp platform on Monday after plunging as much as 24 per cent last week.