In 2017, China suddenly did a u-turn on Bitcoin and cryptocurrencies.
Within months, the nation went from a leading innovator in this nascent sector to one of the most anti-crypto states, implementing bans on certain cryptocurrency media outlets, foreign exchanges, the trading of Chinese yuan for Bitcoin or altcoins, crypto events, and more.
While China has seemingly started to loosen its grip on cryptocurrency actors under its jurisdiction — as made evident by the massive Bitcoin OTC flows purported to be from Chinese traders — the nation’s authorities are still on edge about this industry.
Case in point, a prominent Chinese venture capitalist recently revealed that a massive project based in the region got “clamped down on by the police”, despite the seeming lack of outward wrongdoing.
GXChain Executives In Custody, Office Cleared
According to Wheatpond venture capitalist Dovey Wan, GXChain, a project which bills itself as “a fundamental blockchain for the global data economy”, has just come under pressure from the police.
Citing videos presumably from Chinese social media, she wrote that the firm’s office has been “emptied out and sealed up”. Indeed, the video below shows an absence of employees in the office, multiple police stickers posted on the door, and a lack of company memorabilia in the front lobby.
Another high profile 2017 ICO project GXChain $GXC just got clamped down by the Chinese police
GXChain was a very hot ICO back in the days with ATH market cap over $600M (even now still holds $48M) and considered to be among the very few legit ICOs … pic.twitter.com/6uUPBx8og9
— Dovey Wan 🗝 🦖 (@DoveyWan) September 11, 2019
Wan adds that according to her sources that are “close with the Hangzhou local police”, which preside over the area that GXChain’s main office is located in, the executives of the blockchain startup are being kept in custody “for interrogation”.
According to Wan, GXChain’s legal run-in is surprising to her, as she believes that there are “10,000 other Chinese scams” that police could have addressed.
Yet, she explains that the police may have cracked down on GXChain because it deals with personal credit data, which the cryptocurrency investor claims is a “highly sensitive business” in China now. Indeed, China has had some issues with its credit market over its history, presumably leading to the current move to crack down on those dealing in the industry.
Due to this news, GXChain’s cryptocurrency has collapsed by some 30% in the past day, falling to a market capitalization of $35 million and nearly falling out of this market’s top 100 coins. The coin, GXC, is down to $0.56, from the $0.77 pre-police debacle.
Chinese Authorities Aren’t Pleased With Crypto
The shutdown of GXChain, which Dovey Wan claims was once a “hot ICO” with an actual business model, comes shortly after a number of odd debacles in the Chinese cryptocurrency scene.
Of course, in August, a story about a Chinese Ponzi scheme came to the Western world. As reported by DemandSolutionNews, the scam, PlusToken, purportedly managed to steal some 200,000 Bitcoin, 800,000 Ethereum, and a mass of other cryptocurrencies — all amounting to a fiat sum of over $3 billion — from nearly one million victims, most of which originated in the Asian region.
Eventually, Chinese authorities crackdown, but there remain ringleaders at large.
This was only one of many recent scams with operations in the region, however. Another scam tried to imitate Tron, using the name of the popular altcoin, to secure over $30 million worth of cryptocurrencies from thousand of gullible investors. Police are reported to have started investigating this case.
China’s Digital Currency On Its Way
While Chinese authorities aren’t too pleased with cryptocurrency projects not under their control, the People’s Bank of China is expected to soon launch its digital version of the yuan. A senior official at the central bank recently said that the project is ready to be rolled out, while sources told Forbes that the project is likely to be released to large Chinese enterprises before the launch of Libra and potentially before the end of the year.