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For a country on the fast track to developing its state cryptocurrency, China is still unfavorable towards cryptocurrencies in general. The country banned crypto-related activities in 2017, and it hasn’t taken any significant action since then. But, all that is about to change, as the government of Shenzhen starts to investigate the activities of cryptocurrency exchanges.
Shutting down Exchanges Everywhere
In the early hours of Friday, Shenzhen Special Zone Daily, a news medium that is affiliated with the Communist Party of China (CPC) Shenzhen Committee, reported that the finance bureau of Shenzhen municipality has identified up to 39 cryptocurrency exchanges operating in the region.
UPDATE: Shenzhen law enforcement identified 39 “illegal cryptocurrency” companies
Most likely are ponzi and crypto frauds as Shenzhen is known for being the hub of those. According to the news, exchanges involved will be impacted, waiting for full listhttps://t.co/pkVHYPVqlj https://t.co/gdsXyS28nO
— Dovey 以德服人 Wan 🗝 🦖 (@DoveyWan) November 22, 2019
The investigation was a joint operation between the People’s Bank of China (PBoC), the Economic Investigation Bureau of the Municipal Public Security Bureau and the Municipal Communications Administration. The government has asked the investigators to submit a report on the activities of these illegal businesses by November 25, an all exchanges in question will be made to shut down their operations.
The move is following a similar development in Shanghai, which was first reported by finance news source Caixin. Citing an official announcement published on November 14, Caixin reported that the Shanghai headquarters of the People’s Bank of China (PBoC), as well as the Shanghai Municipal Financial Regulatory Bureau, had directed their administrative offices in the city to inspect cryptocurrency activities within their jurisdictions and submit their findings on November 22.
Rumors About Affected Companies
Several large cryptocurrency exchanges have already been caught in the speculations swirling about concerning this crackdown of exchanges in China.
🇨🇳 Just got to Shanghai..
Don’t see any closed down Binance offices yet.. 😂
(Just lightening a drama-filled time)
— Crypto Godfather 教父 (@CryptoGodfatha) November 22, 2019
Citing unnamed sources, The Block reported that the Shanghai offices of Binance, the largest cryptocurrency in the world by daily trading volumes, had been shut down in the wake of the inspections. It was speculated that about 50 and 100 employees worked at the offices, and have now all but been displaced.
Binance eventually came out to deny all of the rumors, claiming that it didn’t even operate an office from Shanghai, to begin with. Bithumb, another leading crypto exchange with an office in Shanghai, was also rumored to have been affected by the crackdown. This started after reports surfaced that the company had sent all of its Shanghai offices on a “long vacation” without informing them about when they will be returning to work.
However, a follow-up from the company representative revealed that its office in the city operates “steadily without pause.” Whether or not these companies have been affected, it is obvious that the Chinese crypto space will be severely disrupted by these investigations. China is getting more brutal in its disapproval of cryptocurrencies, probably because the launch of its state-backed coin is near.