Yesterday, the National Internet Finance of China (NIFA), a member of the People’s Bank of China, published a report condemning crypto exchanges because they often report fake trading volumes.
“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%, while more than 70 coins’ rate exceeds 50%. Despite the relatively low price and small market value, there have been massive trading volumes”, explains the report.
The report begins by pointing out that in 2017, due to their highly risky and volatile nature and because of many ICOs (Initial Coin Offerings) that proved to be scams, crypto assets were banned in China.
The fluctuation in the value of this type of asset, the report says, is very sudden and can lead to double-digit, if not even triple-digit increases as happened with Steem, but also the opposite can happen, with losses of considerable value driving the token almost to zero, not to mention wash trading practices.
Another aspect that is emphasized is that of leverage, a trading tool that can be very dangerous as it allows for exponential exposure on assets, making everything pass as if it were a simple operation or without repercussions, although it can result in losses 100 times greater than what is in the portfolio.
Finally, the report ends by pointing out that most companies operate abroad and do not have offices in China, and are often engaged in unclear practices and continuous domain changes to avoid identification.
China invites anyone, institutions and individuals, to follow local rules and therefore not to participate or interact with these activities and platforms, reminding that anyone found out to be involved in these illegal activities will be prosecuted for using illegal tools.