Chinese Bitcoin Exchanges Under Scrutiny for Diversion of Funds into WMPs
Thursday,24/08/2017|11:46GMTby
Colin Firth
Two Chinese Bitcoin exchanges have invested idle client funds in WMPs, against regulation.
Bloomberg
China's two biggest Bitcoin exchanges, Huobi and OKCoin, are currently facing scrutiny by the People’s Bank of China for the alleged diversion of idle client funds into wealth-management products (WMP), according to a report from Xinhua, the official Chinese new agency.
Until recently, Chinese Bitcoin exchanges did not charge transaction fees from their clients, which were a major source of revenue for other crypto exchanges around the world. Instead, the exchanges would invest idle funds in client accounts into WMPs to generate revenue. An investigation by the People's Bank of China found that Huobi and OKCoin collectively invested 1 billion yuan ($150 million) into WMPs.
In response to the investigation, Huobi and OKCoin have stopped free Bitcoin trading and margin trading services. The exchange also stopped Bitcoin withdrawals, only to reactivate them some two months back.
Star Xu, CEO of OKCoin, commented on the news report: "We are, of course, prohibited from using our client’s fund for our own gain, and do not do so." He also added: "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, as well as assuring proper record keeping and segregation of funds. We refute allegations to the contrary as patently false."
WMPs are issued by banks and are a key tool to attract funds for lenders. They usually offer 3 to 5 percent returns against 1.5 percent for one-year bank deposits. They do not have any specific investment objectives and invest in bonds and industries. These are mostly off-balance sheet products and are not principal-guaranteed. They are considered to be high risk to capital.
As per Regulation, use of idle funds in client accounts is prohibited. But it looks like Chinese Bitcoin exchanges do not necessarily follow these regulations. Recently, China's central bank has tightened its grip around Bitcoin trading, fearing capital flight and money laundering. This move has ended China's dominance in the global Bitcoin market, which is measured by trading volume.
China's two biggest Bitcoin exchanges, Huobi and OKCoin, are currently facing scrutiny by the People’s Bank of China for the alleged diversion of idle client funds into wealth-management products (WMP), according to a report from Xinhua, the official Chinese new agency.
Until recently, Chinese Bitcoin exchanges did not charge transaction fees from their clients, which were a major source of revenue for other crypto exchanges around the world. Instead, the exchanges would invest idle funds in client accounts into WMPs to generate revenue. An investigation by the People's Bank of China found that Huobi and OKCoin collectively invested 1 billion yuan ($150 million) into WMPs.
In response to the investigation, Huobi and OKCoin have stopped free Bitcoin trading and margin trading services. The exchange also stopped Bitcoin withdrawals, only to reactivate them some two months back.
Star Xu, CEO of OKCoin, commented on the news report: "We are, of course, prohibited from using our client’s fund for our own gain, and do not do so." He also added: "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, as well as assuring proper record keeping and segregation of funds. We refute allegations to the contrary as patently false."
WMPs are issued by banks and are a key tool to attract funds for lenders. They usually offer 3 to 5 percent returns against 1.5 percent for one-year bank deposits. They do not have any specific investment objectives and invest in bonds and industries. These are mostly off-balance sheet products and are not principal-guaranteed. They are considered to be high risk to capital.
As per Regulation, use of idle funds in client accounts is prohibited. But it looks like Chinese Bitcoin exchanges do not necessarily follow these regulations. Recently, China's central bank has tightened its grip around Bitcoin trading, fearing capital flight and money laundering. This move has ended China's dominance in the global Bitcoin market, which is measured by trading volume.
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Finance Magnates met with Paul Margarites, Exness regional commercial director for Sub-Saharan Africa, during a visit to the firm’s office opening in Cape Town. In this talk, led by Andrea Badiola Mateos, Co-CEO at Finance Magnates, Paul shares views on the South African trading space, local user behavior, mobile trends, regulation, team growth, and how Exness plans to grow in more markets across the region. @Exness
Read the article at: https://www.financemagnates.com/thought-leadership/exness-expands-its-presence-in-africa-inside-our-interview-with-paul-margarites/
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In this episode, Jonathan Fine sat down with Jas Shah, one of the most thoughtful voices in global fintech. Known for his work across advisory, product, stablecoins, and his widely read writing, Jas brings a rare combination of industry insight and plain-spoken clarity.
We talk about his first impression of the Summit, the projects that keep him busy today, and how they connect to the stablecoin panel he joined. Jas shares his view on the link between fintech, wealthtech and retail brokers, especially as firms like Revolut, eToro and Trading212 blur long-standing lines in the market.
We also explore what stablecoin adoption might look like for retail investment platforms, including a few product and UX angles that are not obvious at first glance.
To close, Jas explains how he thinks about writing, and how he approaches “shipping” pieces that spark debate across the industry.
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He also discusses the most active pairs, the IB and MIB plans, and hiring needs for new markets.
Watch the whole talk to learn more about how Versus Trade works and where it is heading.
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-Tony Cross, Director at Monk Communications
#fmls #fmls25 #fmevents #FintechMarketing #AI #DigitalStrategy #Fintech #Innovation
Connect with us at:
🔗 LinkedIn: / financemagnates-events
👍 Facebook: / financemagnatesevents
📸 Instagram: / fmevents_official
🐦 Twitter: / f_m_events
🎥 TikTok: / fmevents_official
As brokers eye B2B business and compete with fintechs and crypto exchanges alike, marketers need to act wisely with often limited budgets. AI can offer scalable solutions, but only if used properly.
Join seasoned marketing executives and specialists as they discuss the main challenges they identify in financial services in 2026 and how they address them.
Attendees of this session will walk away with:
- A nuts-and-bolts account of acquisition costs across platforms and geos
- Analysis of today’s multi-layered audience segments and differences in behaviour
- First-hand account of how global brokers balance consistency and local flavour
- Notes from the field about intelligently using AI and automation in marketing
Speakers:
-Yam Yehoshua, Editor-In-Chief at Finance Magnates
-Federico Paderni, Managing Director for Growth Markets in Europe at X
-Jo Benton, Chief Marketing Officer, Consulting | Fractional CMO
-Itai Levitan, Head of Strategy at investingLive
-Roberto Napolitano, CMO at Innovate Finance
-Tony Cross, Director at Monk Communications
#fmls #fmls25 #fmevents #FintechMarketing #AI #DigitalStrategy #Fintech #Innovation
Connect with us at:
🔗 LinkedIn: / financemagnates-events
👍 Facebook: / financemagnatesevents
📸 Instagram: / fmevents_official
🐦 Twitter: / f_m_events
🎥 TikTok: / fmevents_official
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Attendees will hear:
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#fmls #fmls25 #fmevents #Brokers #Trading #Fintech #FintechInnovation #TradingTechnology #Innovation
Connect with us at:
🔗 LinkedIn: / financemagnates-events
👍 Facebook: / financemagnatesevents
📸 Instagram: / fmevents_official
🐦 Twitter: / f_m_events
🎥 TikTok: / fmevents_official
Much like their traders in the market, brokers must diversify to manage risk and stay resilient. But that can get costly, clunky, and lengthy.
This candid panel brings together builders across the trading infrastructure space to uncover the shifting dynamics behind tools, interfaces, and full-stack ambitions.
Attendees will hear:
-Why platform dependency has become one of the most overlooked risks in the trading business?
-Buy vs. build: What do hybrid models look like, and why are industry graveyards filled with failed ‘killer apps’?
-How AI is already changing execution, risk, and reporting—and what’s next?
-Which features, assets, and tools gain the most traction, and where brokers should look for tech-driven retention?
Speakers:
-Stephen Miles, Chief Revenue Officer at FYNXT
-John Morris, Co-Founder at FXBlue
-Matthew Smith, Group Chair & CEO at EC Markets
-Tom Higgins, Founder & CEO at Gold-i
-Gil Ben Hur, Founder at 5% Group
#fmls #fmls25 #fmevents #Brokers #Trading #Fintech #FintechInnovation #TradingTechnology #Innovation
Connect with us at:
🔗 LinkedIn: / financemagnates-events
👍 Facebook: / financemagnatesevents
📸 Instagram: / fmevents_official
🐦 Twitter: / f_m_events
🎥 TikTok: / fmevents_official
