Chinese Financial Watchdog Warns of Manipulative Crypto Exchanges

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The Nationwide Web Finance Affiliation of China (NIFA), a serious Chinese monetary watchdog, warned traders of rising dangers in crypto investments.

Whereas manipulation is a longstanding concern for crypto traders, NIFA’s warning is notable for additionally pushing again on the narrative of digital foreign money as a protected haven throughout a time of international turmoil.

NIFA, a self-regulatory group affiliated with China’s central financial institution, stated Thursday that foreign-based crypto exchanges have faked buying and selling quantity, based on its personal knowledge evaluation. It additionally famous that some buying and selling platforms in contrast digital currencies to protected haven belongings like gold and silver, however a latest tumble within the crypto market precipitated important losses for traders.  

“In our sampling evaluation based mostly on buying and selling knowledge from some of the exchanges, the every day buying and selling turnover charge for greater than 40 cash is over 100 p.c, whereas greater than 70 cash’ charge exceeds 50 p.c,” NIFA stated. “Regardless of the comparatively low worth and small market worth, there have been huge buying and selling volumes.” 

The buying and selling platforms have created the “false prosperity” within the crypto buying and selling market by tempering statistics and utilizing robots to extend buying and selling quantity. Some platforms have fully made up buying and selling quantity by copying different exchanges’ knowledge, NIFA claimed. 

The authority additionally accuses the buying and selling platforms of misguiding traders by claiming digital currencies are even safer than gold and silver to mitigate the volatility within the worldwide monetary market. 

“After tricking traders into investing in crypto, some exchanges will manipulate the market via a variety of buying and selling strategies to take the traders’ belongings,” NIFA stated. 

For instance, exchanges can cease traders from buying and selling by shutting off their methods, freezing belongings or staging a system breakdown. Some traders wouldn’t be capable of shut a place and undergo so much of losses, particularly for those who commerce with excessive leverage.  

Based on NIFA, the overwhelming majority of crypto exchanges are based mostly outdoors China because the authorities banned buying and selling actions in 2017. In consequence, it has been tough for regulators to trace down such establishments and retrieve losses for traders. 

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