Chinese Exchange Closes Up Shop Amid The 'Crypto Ban' Drama
The latest instalment of China’s bitcoin (BTC) fear, uncertainty, doubt (FUD) drama triggered panic among some investors while Chinese individuals are still buying crypto as usual. Meanwhile, crypto exchange XMEX is accused of using recent developments to shut down its operations.
The Chinese government issued similar bans on crypto-related payment and financial services in 2013 and 2017, but Bobby Lee, Founder and CEO of crypto wallet app Ballet told Reuters that the latest announcement represented a mere attempt by Beijing to protect retail investors from volatile markets.
However, it could also pose a challenge for banks to track down crypto-related dealings, Lee said.
“If you look at the banking activity in China, millions or maybe billions of transactions happen on a daily basis. From all that … how many are actually really crypto services versus dining or e-commerce? It’s almost unknowable,” Lee was quoted as saying.
That said, Reuters found that, on Thursday, it was still possible for Chinese individuals to buy bitcoin and other crypto and trade them on overseas crypto exchanges such as Binance.
But further controversy came with XMEX’s announcement in which the exchange declared that, in a bid to “actively respond to the joint announcement of the China Mutual Finance Association and other three departments on "Financial payment institutions shall not conduct business related to virtual currency,"” the company would comply by shutting down its operations permanently - starting today.
Contract transactions and documentary transactions will be automatically cancelled and settled, currency trading will terminate the transaction, customer to customer (C2C) transaction will terminate the transaction, and all pending orders will be automatically cancelled, the statement said.
The statement is dated April 21, and updated just hours ago.
In now-erased posts, XMEX claimed to have some 3 million global users. To ensure the safety of their assets, the exchange’s users were “requested to withdraw all account assets and Jianlibao assets" before May 23, 2021.
This said, a number of crypto industry observers have raised doubts about the exchange’s motives for closing up shop.
Commenting on the exchange’s move, journalist 'Wu Blockchain' said that XMEX is “an exchange that mainly sells contract gambling to people in small cities and rural areas in China. Some people speculate that they just made enough money to find an excuse to close.”
Another member of the Twitter commentariat, who goes by the name of Polly฿, offered a different explanation and said that XMEX is based “in the Seychelles, they consider themselves a global platform, they could only finish operations in China,” referring to the section of XMEX's website where they say they “do not want to violate the regulations of various countries.”