Following the major hack of well-known cryptocurrency exchange Binance, other exchanges that deal with cryptocurrencies have been blocked in China, leading investors to believe that the Chinese government may be behind this move.
Many cryptocurrency trading platforms have gone offline in China, Binance, BitMEX, Gate.io, and Bitfinex being among the exchanges that were closed as of Friday afternoon. Prices of major cryptocurrency such as Bitcoin and Ethereum have suffered a continuous decrease, losing over 12% and 11% in the last 24 hours.
Last September, the Internet finance regulators in Beijing allegedly closed all cryptocurrency exchanges after the People’s Bank of China and six other state regulators declared a total ban on initial coin offerings (ICOs) in the country. At that time, the three largest Bitcoin exchanges in China said they would end their trading services in China without giving any further reasons for their decision.
While the ICO ban was issued by seven state regulators and backed up by an official document, the ban on cryptocurrency exchanges has been more vague and without any official reports to support it.
“China will not kill it all, because China would suffer a setback if cryptocurrency turns out to be well accepted internationally one day,” an anonymous Beijing-based lawyer who follows cryptocurrencies closely told China Money Network. “However, the government does not tolerant using cryptocurrency to harm the economic interests of its people.”
After the ICO ban from September, trading platforms were still operating but offered over-the-counter services in China, instead of centralized trading services. Huobi.com, for example, still offers information about coin sales including prices, coins supply, their monthly trading volume and what payment methods they accept.
To assist OTC trading, online forums and WeChat groups were also created. Other trading websites relocated their servers in other countries. For example, Binance moved its servers from China to Japan, a more crypto-friendly country. However, after Binance was hacked yesterday, a majority of the websites which were still available to Chinese traders have now gone offline.
“Binance’s hack shows clearly that there is cyber security concern and shutting down the websites may be a precaution measure for the regulator, especially during China’s Two Sessions (The People’s Congress),” notes the Beijing-based lawyer. “But there is no evidence to prove that the government did so.”
Whether the Chinese government was involved or not in this en-masse shut down of crypto exchanges cannot be proven at the moment, but it is obvious that the hack which affected Binance was the catalyst for this move.