The National Internet Finance Association of China(NIFA) has issued a warning for investors who have been associated with the crypto-verse about the growing risks of the investment in the field especially crypto exchanges who are known for manipulating trading volumes on a regular basis.
NIFA is among the major Chinese Financial watchdog and is affiliated with the Chinese Central Bank. The statement came on Thursday where it noted that the research from their committee has shown many foreign crypto exchanges indulge in faking trading volume and wash trading to show a heightened number to lure new customers.
Given, NIFA is China’s Central Bank affiliated watchdog, it is also trying to push back the narrative that digital assets like Bitcoin are safe haven.
NIFA noted that the recent crypto market crash is a piece of clear evidence that Bitcoin and cryptocurrencies are not safe-haven assets like Bitcoin and Gold. The agency said,
“In our sampling analysis based on trading data from some of the exchanges, the daily trading turnover rate for more than 40 coins is over 100 percent, while more than 70 coins’ rate exceeds 50 percent,” NIFA said.
“Despite the relatively low price and small market value, there have been massive trading volumes.”
NIFA claimed that its analysis report shows that foreign crypto exchanges have divulged in faking their trading volumes with the help of bots while quite a few have blatantly copied the trading volume data of other exchanges and tried to pass it off as their own. The agency further accused these exchanges of misguiding investors on the nature of these digital currencies. NIFA said,
“After tricking investors into investing in crypto, some exchanges will manipulate the market through a range of trading techniques to make the investors’ assets.”
Exchanges are known for abruptly shutting their service citing maintenance reasons to avoid traders from trading on several occasions. While not every exchange do that there have been many prominent ones who have been accused of following this business model to contain their losses.
China’s Regressive Stance on Crypto Getting Stronger?
China has banned foreign crypto exchanges back in 2017 and trading of digital assets has been illegal as long as one can remember. The world’s most populous country is also known for its propaganda though which has been quite evident ever since the prime minister called for increased blockchain adoption.
Right after the PM’s call the state media propaganda machinery cited that Bitcoin is the best use case of blockchain, which gave many crypto enthusiasts high hopes that China might finally recognize the growing influence of these crypto-assets and might regulate crypto trading.
However, these hopes were short-lived as the state machinery in the following days made it clear that despite Bitcoin being the best use-case of blockchain, it has many flaws that would be overcome by their CBDC.
In the following week, the government also witch-hunted many crypto service providers evaporating any ray of hope among crypto enthusiasts. Given China’s authoritarian regime it would be a shocker if they allow the decentralized form of economy to flourish without them having any control. The state machinery has been trying to build a narrative around why crypto is bad for quite some time now.