The People’s Bank of China yesterday warned investors once again in its official WeChat account, hoping that the masses would not fall into the fraud traps of some cryptocurrency exchanges because they wanted to “make fast money.” For example, through false trading to create the illusion of excessive trading or system failure, and other reasons that prevent investors from trading normally, they pointed out that the risk of investing in cryptocurrencies is high, not as some people claim to be safe-haven assets.
As early as 2017 when the cryptocurrency market began to rise, the exchanges and ICO (initial coin offering) projects at that time seemed to have sprung up, and the People’s Bank of China issued an announcement to prevent related market risks in September of the same year, pointing directly at exchanges and ICOs, All are illegal financial activities. Later, it also investigated 173 domestic exchanges, which required them to cease operations or move overseas, including the current large-scale exchange Binance.
China has not relaxed the regulation of the cryptocurrency market anymore, and the People’s Bank of China issued an article titled “Clear Your Eyes and Don’t Be Fooled by a Virtual Currency Trading Platform” via WeChat yesterday. Although this article is similar to the style of small knowledge, it aims to educate the public not to be deceived, but it also mentions false transaction data, which shows that the People’s Bank of China has the opportunity to continue to tighten in the future.
The article mentions that some illegal exchanges plan to obtain investors’ principal. Common methods will use false transactions to attract investors to participate. According to the market survey cited by the People’s Bank of China, the top three exchanges overseas have average turnover rates of 13.25%, 8.33%, and 6.15%, which are higher than the average turnover rate of overseas licensed exchanges by 2.37%, which is higher. 2.6 times to 5.6 times, there are even suspicions of using trading programs to create false transactions.
At the same time, the People’s Bank of China pointed out that there are all opportunities for trading to suspend trading on the platform for reasons such as system failure and the need for repairs. Investors who have already leveraged have been closed due to large price fluctuations. The text more vividly describes it as “plugging the Internet cable,” which makes the system forcibly log out by investors during trading, delays in transactions, and positions cannot be displayed. Relevant practices usually last from half an hour to two hours. Some exchanges even use trading programs to forcibly lower or raise prices during system failures.
As for some exchanges claiming to use blockchain technology for support, they actually just scam with innovative technologies. In addition, the gold analogy in the market claims that Bitcoin is a safe-haven asset. The People’s Bank of China claims that this is a false proposition, pointing to its high price volatility, which is not considered a safe-haven asset at all.