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China Getting Serious with Its Crypto Activity Crackdown


Though Bitcoin is bearish, crypto experts believe that regulatory clarity is a necessity in order to ensure that institutional investors are willing to participate in the market. However, change isn’t always a good thing.

Cryptocurrency regulations can make or break an entire crypto industry in a particular country. For instance, you have a country like Malta that welcomes different crypto-related businesses. But if you will look at China, things are the complete opposite. In the past days, Chinese authorities continued its crackdown of crypto-related activities.

More than 120 offshore cryptocurrency exchanges have been blocked recently as it was reported in South China Morning Post. In fact, the Central Bank chose to not respond to any of the reporters. Many are speculating that Chinese authorities are following up with their crackdown considering financial risk and instability brought about by cryptos.

Warning Against Fraud

Chinese authorities have issued a warning about illegal fundraising attempts as well that are associated with cryptocurrencies. According to the warning of several authorities, investors should be warned against “lawless entities” that are looking to acquire funds “using the banner of ‘financial innovation’ and ‘blockchain’ and distributing ‘so-called virtual currency’, ‘virtual assets’, and ‘digital assets’”. The document also encourages the public to be smart when it comes to blockchain-related information.

The authors of the document include China’s Banking Regulatory Commission, People’s Bank of China, and the Ministry of Public Security. According to the document, “such activities are not really based on blockchain technology, but rather the practice of speculative blockchain concepts for illegal fundraising, pyramid schemes, and fraud”.

Blocking Crypto Businesses

The document was published just a few days after additional crypto businesses that are located outside China were added in the country’s “Great Firewall”. Around 124 platforms were included in the list. The document reads that “The funds for these illegal activities are mostly overseas, and supervision and tracking are very difficult”.

China also recently banned hotels and other venues from hosting crypto-related gatherings. And because of this, for many, it is the start of a renewed effort by China to ban cryptocurrencies. China, over the years, has been known for looking closer at its past regulations. The crackdown of crypto industry started around September 2017. Could this mean that we could expect more from China?

What Makes a Scam?

Though there are warnings all over the document that was recently released by Chinese authorities, there are no concrete strategies that they suggest you should be doing. The PBOC noted in the document that scams usually claim things such as “the value will only rise”, and terms such as “high return, low risk”. According to the central bank, these are red flags that you are dealing with a fraud.

There are three things that people see in a crypto scam. One, the scheme is most likely operated internationally. It makes use of social media instruments in order to communicate and to raise funds. Next, deceptive and manipulative methods are used in order to attract investors. Airdrops and social media marketing are just some of the most common tricks done by these fraudsters.

And also, you have criminals that use propaganda saying that it could be a source of “passive income” or sometimes, you also have the term “dynamic income” getting thrown around every now and then.


Lee Jenkins

Lee is our resident cryptocurrency expert who knows the ins and outs of each coin and the blockchain technology behind them. You’ll find that most of our technical guides are written or overseen by Lee and they are all easily digestible by the new and experienced alike, so there is no better place to learn blockchain 101 than here. Occasionally you may see a news article from him if it’s tech related!