The National Internet Finance Association of China (NIFA), a self-regulatory body under the People’s Bank of China (PBoC), issued a warning on Thursday against the fake trading volumes reported by overseas crypto exchanges.
The watchdog agency detailed that some of the digital currency platforms are taking advantage of the recent volatility of the traditional markets, creating a hype that digital assets are safer than investments in gold or silver.
“These platforms also create illusions of “prosperity” in the virtual currency trading market through actions such as robot program brushing and data tampering,” NIFA warned.
“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,” the agency stated. “Despite the relatively low price and small market value, there have been massive trading volumes.”
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The great crypto ban
China banned initial coin offerings (ICOs) and all cryptocurrency exchanges in 2017, forcing many flourishing crypto-businesses to exile. Then the largest crypto trading market, China’s volume bottomed overnight.
However, crypto traders in the country headed to over-the-counter (OTC) desks to get their hands on stablecoins and then trade on overseas exchanges surpassing the Great Firewall. The country also sees a surge of peer-to-peer platforms for crypto exchanges.
Apart from the Chinese watchdog, Bitwise also reported last year that 95 percent of all reported crypto exchange volumes were fake.
The agency also warned the traders that these platforms also use “market manipulation methods to encroach on consumer property.”
“Any institution and individual should strictly abide by national laws and regulatory regulations, and do not participate in virtual currency trading activities and related speculations,” the agency warned.