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Chinese Bitcoin Exchanges Accused of Misappropriating Client Funds

Chinese Bitcoin Exchanges Accused of Misappropriating Client Funds

Leading Chinese bitcoin exchanges have been accused of using client funds for the purposes of making high-risk investments. Chinese state media outlet, Xinhua, first reported the allegations that Chinese bitcoin exchanges have been diverting customer funds toward private “wealth management products”.

Also Read: A Brief Glimpse Into the Lives of Chinese Bitcoin Miners

Chinese State Media Has Alleged That Chinese Bitcoin Exchanges Have Collectively Invested Approximately $1B Yuan ($150M USD) Into “Wealth-Management Products”

Chinese Bitcoin Exchanges Accused of Misappropriating Client Funds

Leading Chinese exchanges have been accused of using customer funds to make high-risk private investments, Xinhua has reported. Xinhua alleges that Huobi and Okcoin collectively invested approximately 1b yuan ($150 m USD) into “wealth-management products”, citing recent investigations made into the activities of cryptocurrency exchanges by the People’s Bank of China.

Okcoin has issued a statement refuting the allegations, stating “we at OKCoin have a strict policy of placing idle client funds into lower-risk banking products. This policy is in keeping with general practices in the banking and securities industry, for both the purpose of safeguarding clients funds.” Huobi is yet to issue a statement regarding the allegations.

Xinhua has since published an editorial piece advocating for greater government regulation in the face of increasing dynamism within the cryptocurrency sphere. “New things are developing so fast that regulations must keep pace,” Xinhuan states, before expounding that authorities go to greater lengths to shut down bitcoin exchanges suspected of “dubious” operations.

Ascertaining the Validity of Xinhua’s Claims Has Become Difficult Due to the Absence of Further Documentation Supporting the Allegations

 

Chinese Bitcoin Exchanges Accused of Misappropriating Client Funds

Ascertaining the validity of Xinhua’s claims has become difficult due to the absence of further documentation supporting the allegations. Western media has been unable to access a key People’s Bank of China report cited in the article, and further details regarding the investment products that hosted clients funds are unavailable.

Quartz has reported that Beijing-based bitcoin exchange employees have revealed that cryptocurrency exchanges have become subject to increasing regulatory scrutiny following the People’s Bank of China’s crackdown on leading cryptocurrency exchanges, included mandatory reporting to China’s central bank.

Do you think that the major Chinese bitcoin exchanges are likely to have been engaging in high-risk investments using client funds? Share your thoughts in the comments section below!


Images courtesy of Shutterstock and Wikipedia


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Tags in this story
accuse, allegation, allege, Bitcoin exchange, China, chinese, client, customer, Funds, N-Economy
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Samuel Haig

Samuel Haig is a journalist who has been completely obsessed with bitcoin and cryptocurrency since 2012. Samuel lives in Tasmania, Australia, where he attended the University of Tasmania and majored in Political Science, and Journalism, Media & Communications. Samuel has written about the dialectics of decentralization, and is also a musician and kangaroo riding enthusiast.