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25 January 2021

Locking Down China's Troubled Crypto Exchanges - Decrypt

Locking Down China's Troubled Crypto Exchanges - Decrypt


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Locking Down China's Troubled Crypto Exchanges.

It started when Mingxing “Star” Xu, founder and CEO of the popular exchange OKEx, was taken away by Chinese police, resulting in weeks of withdrawal suspension and panic.

Then came a rumorthat Leon Li, Huobi’s founder, might have been taken away as well.

So, why, all of a sudden, did the Chinese government sharpen its knife and target these exchanges that have been dancing safely in the grey zone.

This week’s da bing explores these questions and teases out the very real boundaries that exchanges have to live within.

Let’s start with China’s ICO banon September 4, 2017 when the seven government departments, including the People’s Bank of China (PBOC), ordered that crypto trading be halted.

Why is the government so sensitive when it comes to fiat and crypto trading.

The Chinese government was never anti-crypto per se—it is against those who would use crypto to mess up its monetary policy.

Even though very little has been revealed of the latest OKEx and Huobi incident, many industry OGs believe that the exchanges might have been unknowingly entangled in money laundering cases.

To protect themselves from future investigations, Chinese exchanges need to be more vigilant on OTC businesses.

Another way out is to decentralize, which might explain Huobi’s aggressive move to acquire Korean’s most popular exchange, Bithumb. After all, it’s easier to serve Chinese government from an adjacent East Asian country than anywhere else.

The tricky part of operating an exchange in China is that its ability to survive is wholly subject to the government whim?

Many on-chainanalyses suggested that the tokens had already been sold by the end of 2019.

One way or another, the government has been a secret player in determining crypto price.

Now that OKEx appears to be out of its dark period when its founder went missing, the exchange is launching a series of new campaigns to retain customers.

However, after suffering from a major trust incident when it was revealed that its owner Star Xu is the only key holder of the exchange, the exchange might face some suspicion and resistance to its free-money gambit.

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