Bitcoin exchanges have struggled to survive on mainland

The average lifespan of mainland-based virtual currency businesses is just nine months, indicating Beijing's success in limiting financial activity outside the official banking system.

A dozen Chinese bitcoin exchanges have gone bankrupt or shut down in the past 12 months as they have struggled to be profitable or just disappeared.

"The [People's Bank of China] wants to suppress and control bitcoin so it doesn't go crazy or wild," BTC China chief executive Bobby Lee said in Hong Kong yesterday.

Speaking to about 500 participants in Hong Kong's first bitcoin conference, Lee said the exchange failures had damaged the industry and prevented wider adoption of the currency.

"This is actually a sad story as in each case people lose their money because they've left their money in one of these exchanges," he said at the Inside Bitcoins trade show. "Some run away, some default."

On Sunday, it was revealed that police were investigating the Hong Kong Crypto Exchange, a local industry newcomer, over the alleged disappearance of tens of thousands of dollars worth of the virtual currency.