Chinese Exchanges Suspend Withdrawals Due to Regulation
China continues to enforce regulations on Bitcoin. The large exchanges suspend withdrawals of bitcoin and litecoin while implementing anti-money laundering rules, which is announced to need at least a month of time. Also, the central bank meets the other exchanges and gives orders.
For several weeks the Chinese central bank, the PBOC, starts to regulate Bitcoin exchanges. After it consulted the three big exchanges BTCChina, Huobi, and OKCoin, and ordered them to stop margin trading and to introduce trading fees, it now begins to enforce anti-money laundering rules, as expected.
As cnLedger reports on Twitter, the three big exchanges recently made the exactly same note at the same time. In it, they inform their customers on stricter measurements against money laundering and warn against risks of cryptocurrencies. With Google translate the original notice, in this case on Huobi, reads as follows:
In order to further inhibit speculation in the bitcoin market, and to guard against the possibility of illegal pyramid selling, money laundering and exchange through Bitcoin, the fire network will strengthen the customer identification, strengthen the source of funds and the currency users audit supervision. Found suspicious user behavior, the fire network may take to limit the currency, trading, freezing of suspicious assets related measures, and to the relevant departments to report. Thank you for your understanding and support.
Bitcoin is not issued by the monetary authorities, not legal and mandatory, with a high risk of price fluctuations, at your own risk, under the premise of prudent investment.
Shortly after this cnLedger tweets that the exchanges “CHBTC, BTCTrade, and Yunbi, etc.” released the same notice. It now seems to be the new standard in China’s cryptocurrency industry to verify a valid ID as a pre-condition for trading.
Then on February 8, cnLedger stopped by with shocking news; both Huobi and OKCoin announced that while they implement AML procedures, all withdrawals are suspended for one month. All bitcoin on exchanges are, more or less, frozen and kept hostage until their owners prove their innocence, putting downward pressure on BTC-USD, down over 9 percent over the past 24 hours.
The suspects come from Bingyang, a small city notorious for telecom frauds in Guangxi province. There are constant demands for money laundry. With some self-education online, Xu, the laundry dealer, figured out how to clean money via bitcoin exchanges. Xu managed to hook up with Xiao, who was a committed criminal for a series of telecom crimes. They managed to pull off two jobs, laundering a total of 5.424 million RMB(~790k USD at spot rate).
During 2014 the criminals used altcoin exchange Bter to launder these amounts of money. That this was disclosed in recent days might not help to appease the PBOC.
To ultimately regulate the rich ecosystem of Chinese altcoin and bitcoin exchanges, the central bank met nine further exchanges in Beijing; CHBTC, BTCTrade, HaoBTC, Yunbi, Yuanbao, BTC100, Jubi, Bitbays, and Dahonghuo.
During the meeting, the PBOC explained the exchanges the legal, regulatory and technical risks of bitcoin. It also told them the rules the exchanges have to comply with; no Margin Trading, respect of all laws regarding money laundering, money exchange, taxes and advertising. The press release of the PBOC ends with the note that a violation of these rules might result in the shutdown of the exchanges. According to 8BTC with this note, the central bank presents itself significantly harsher than against the three big exchanges.
Maybe in anticipatory obedience, BTCChina announced to cease the processing of Chinese Yuan (CNY) on its exchange BTCC Pro. BTCC Pro is a platform for leverage trading mainly build for foreign customers, which by now, however, enables deposits and withdrawals in CNY. As the exchange announced, all CNY should be withdrawn by February 11. Later it will only be possible by selling them for bitcoin and withdraw these. The native exchange of BTCC is not affected and continues business as usual.