KuCoin Terminates Accounts of China’s Users, Following Other Cryptocurrency Exchanges

KuCoin cryptocurrency exchange has announced its intention to close all accounts associated with customers of mainland China, following the People’s Bank of China (PBOC) recent reviving its fresh crackdown on cryptocurrency trading.

On October 3, the Seychelles-based crypto exchange stated that all users from mainland China would have to close their accounts and withdraw their funds from the platform before December 31 2021.

Kucoin cited the decision triggered by the announcement recently made by Chinese authorities in late September. After China’s Central Bank announced the crackdown, KuCoin stated that it began conducting an internal review to assess what would be the most convenient action for its customers. As a result, the firm decided to leave China as the only option which complies with local regulations.

KuCoin stated: “To protect the rights and interests of users, we strongly recommend that relevant users transfer their assets to other platforms before 24:00 (UTC+8) on December 31, 2021”, and it will continue reminding them to do so up until such a date.

The exchange said that it has 8 million users on its platform, and according to data from CoinMarketcap, KuCoin traded $1.7 billion in the last 24 hours.

Exchanges Exiting China

KuCoin is the third large crypto exchange that made a similar announcement less than two weeks after China’s central bank doubled its cryptocurrency clampdown.

On September 26, the Binance exchange blocked new account registrations using Chinese mobile phone numbers, while Huobi Global stated that it would remove all mainland Chinese accounts by the end of the year.

More than 18 platforms offering services related to cryptocurrency have either announced that they are exiting the market in China or are now inaccessible. Another at least 11 firms have reportedly halted providing services to Chinese customers. 

On Friday, September 24, the People’s Bank of China banned all cryptocurrency-related transactions. It warned employees of overseas-based exchanges that they would be investigated and called for increased censorship on crypto information providers.

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China’s crypto holdouts: Bitcoin nodes and OTC desks struggle on

Despite Beijing’s ever-increasing crackdown on the crypto industry, there are still some signs of life in the People’s Republic regarding the Bitcoin network and OTC trading.

China intensified its clampdown on crypto last week in an effort to suppress any remaining activity related to digital assets within its borders. The regime specifically targeted crypto transactions, but as researched by Cointelegraph, this action is nothing new with at least 19 similar crackdowns over the past decade or so.

Despite the latest move, there are still 135 Bitcoin nodes in operation in China according to data from Bitrawr which measures nodes by geographical location. However, this is just 1.21% of the total 11,262 Bitcoin nodes spread across the planet. There may be more if they are operating behind virtual private networks (VPNs) and/or using onion routing with Tor which masks locations

Bitcoin nodes are the software that runs the protocol, containing the full ledger or a segment of it containing a history of the transaction data. Distributed and decentralized systems are specifically designed to be hard to shut down completely so the regime may struggle to extinguish these final few hangers-on or those operating via Tor.

While it’s difficult to put figures on the volume due to its opaque nature, over-the-counter (OTC) trading is also maintaining a foothold in China according to various reports as is the local currency pair.

Local media outlet Wu Blockchain reported that the RMB/USDT pair, which is still offered by major exchanges such as OKEx and Huobi, has been trading at a premium. He noted panic selling last week, which has since subsided.

OKEx is currently offering 6.35 yuan for 1 USDT where the actual exchange rate for a greenback is 6.47 according to XE.com.

Related: Institutional investors bought the dip as China FUD broke

OTC trades are carried out peer-to-peer which circumvents the usage of a bank or the spot markets on centralized exchanges — though many exchanges do have related OTC desks. According to Coindance, volumes in China have been relatively stable since early 2020 with around 7 million Yuan (around $US1 million) being traded per week on P2P platform Localbitcoins.

Localbitcoins volume CNY – coin.dance

Former CEO of China’s first crypto exchange BTCC, Bobby Lee, thinks that Beijing will target OTC desks in its next crackdown. Earlier this week, he said that OTC platforms that are operated by the big exchanges will be closed down or forced to exclude Chinese users. Speaking to Bloomberg on Sept. 29, Lee added:

“They really don’t want any loopholes where people can use a digital currency as a vehicle to move assets abroad.”

He followed that up with a prediction that BTC markets are due another FOMO rally that could send prices to $200,000.


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China’s Ethereum Mining Pool Sparkpool To Stop Offering Services Following PBOC’s Clampdown on Crypto

Sparkpool, one of the world’s largest Ethereum mining pools, is shutting down its shop amid China’s move to ban crypto assets within its jurisdiction.

On Monday, September 27, the China-based Sparkpool, the second-largest Ethereum mining pool in the world, announced that it had stopped offering services to new users in China as of September 24 and also plans to entirely suspend services to all its existing users in china and abroad as of Thursday, September 30.

Hangzhou-based Sparkpool stated the move is aimed to protect the safety of user assets in response to regulatory policy requirements announcement by the People’s Bank of China (PBOC) last Friday that effectively banned cryptocurrency.

In other words, Sparkpool wanted to be maximally compliant with regulatory requirements. Last Friday, China tightened its crackdown on cryptocurrencies and crypto-assets, declaring all cryptocurrency-related activities illegal.

The communist party-ruling central bank also affects businesses outside the country, advising overseas exchanges not to offer cryptocurrency services or conduct digital transactions with China’s people. The PBOC has also stated that it will work with domestic agencies to carry out comprehensive monitoring.

Sparkpool launched in 2018 and eventually became one of the world’s largest mining pools for ether. It is the second-largest miner in terms of the hashrate on the network, behind Ethermine, the world’s largest Ethereum mining pool.  

Sparkpool’s mining power currently contributes about 142 TH/s, about 22% of Ethereum’s global hashrate, just under Ethermine’s share of 24%.

China advised local authorities to crack down on crypto mining in May, but Chinese miners had quietly resumed Ethereum mining operations over the last few months.

Other firms also have followed SparkPool’s move. On Sunday, September 26, two of the world’s largest Bitcoin exchanges stopped taking users from China following the renewed cryptocurrency ban by the PBOC. Huobi announced last Sunday that it would stop serving existing users in China by the end of this year. Binance also has blocked new registrations of accounts by mainland customers.

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Bitcoin, Ethereum, Solana And Other Crypto Prices Further Plunge Following China’s Fresh Crypto Ban

Today on Friday, September 24, prices of all cryptocurrencies have plummeted amid the announcement by China’s Central Bank that all crypto-related transactions are illegal and must be banned in the country.

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Before China’s announcement, most cryptocurrencies were indicating good signs of recovery after the Monday crash, which wiped almost $200 million from the cryptocurrency market.

On Friday morning, most cryptocurrencies stabilized their value after the crash that happened on Monday. Bitcoin was trading at $44,985.54 per coin, up by 2% in the last 24 hours; Ether, the second-largest cryptocurrency and the coin linked to Ethereum blockchain, surged its value to $3,102, up 1.27%. Other altcoins were holding the cards up by about 1.80%.

However, on Friday afternoon, the People’s Bank of China (PBOC) released a statement, saying that all private virtual currencies like Bitcoin, Ethereum, and other altcoins do not enjoy the same legal status as legal tender, are not legally repayable, therefore should not be traded as circulating currencies in the market.  

As a result, the news from the People’s Bank of China has triggered a further crypto market crash, which has seen Bitcoin dropped 4% to about $42,560 in the space of two hours, Ether lost 7.5% to plunge at $2,881, Cardano down by 3% to hit $2.16, Ripple’s XRP declined 7% to 92 cents, and Dogecoin dropped 7% to stand at 20 cents. 

While experts stated that the crypto crash that happened on Monday, September 20, did not occur in a vacuum as stock markets also affected as well as China’s property market, some now point to the cause of the fresh plunge as “FUD” over Chinese bans – a common classic source of crypto price pressure.

For example, the popular crypto analyst Michaël van de Poppe said: “Markets are always reacting so heavily to FUD. Impressive.”

George Zarya, CEO at digital asset prime brokerage and exchange BEQUANT, said:

“This time the point was made very clear that China will not support cryptocurrency market development as it goes against its policies of tightening up control over capital flow and big tech.”

Similar comments have also been said, stating that global demand for cryptocurrencies plunged since the start of this week following the possible collapse of China’s second-largest property developer, Evergrande, which frightens investors and has caused the fall of global equity markets.

Meanwhile, the executive director of crypto/digital assets hedge fund ARK36, Ulrik Lykke, said that China has been going through a rough economic patch recently due to the uncertainty surrounding the Evergrande debt restructuring.

However, experts expect the crypto market to witness some pullback in the coming days.

Lykke said that such a scenario wouldn’t be too surprising as Bitcoin and other cryptocurrencies are increasingly being recognized and actively used as a hedge against uncertainty and possible fiat currency debasement. He stated that the Chinese authorities are willing to use Bitcoin as a hedge despite the governmental ban, which would tell just how much long-term confidence investors already have in the asset.

“While each time China’s crackdown on crypto happens, the markets react with a price drop, each time the effect is smaller and more short-lived”.  

Lykke further stated that investors should be careful not to make emotional decisions based on this trending news story. On-chain fundamentals still indicate that bull market continuation in Q4 is likely.

Meanwhile, Katie Stockton, the founder and managing director of Fairlead Strategies, also recently said that Bitcoin’s uptrend remains intact over the long term. “The long-term uptrend still has a hold on bitcoin, with our monthly indicators pointing higher, putting short-term volatility into a bullish context,” Stockton said. 

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Changpeng Zhao Says He’s Willing Step Down as Binance CEO Amid Global Cryptocurrency Crackdown

Binance, the world’s largest crypto exchange by trading volume, is looking for a senior person with a solid regulatory background to become its new CEO.

Speaking at a virtual press conference, Changpeng Zhao, CEO of Binance Exchange, has stated that he is willing to step down from his role. At the same time, the firm seeks to become a regulated financial institution. Yet, the CEO stated that he had no immediate plans to quit his role, but the firm has a succession plan. 

“We’re going to pivot to be a fully regulated financial institution going forward,” Zhao said and added that he would be “very open” to getting a replacement CEO with more regulatory experience.

While Zhao emphasised that there are no immediate plans for his succession, he said that the firm was “keeping our options open.”

“I’ll be honoured to continue to run Binance as a regulated financial institution until we find somebody who may do a better job.”

Zhao said that the firm aims to create several regional headquarters across the globe and will seek licenses wherever they are available. In the past, he stated that Binance has no official headquarters. Zhao further stated that he will always contribute to Binance and the BNB ecosystem as he doesn’t have to be CEO.

Binance Working to Strengthen Its Compliance  

Early this month, Zhao admitted that problems in the company are partly due to its rapid growth. During that time, Zhao acknowledged that Binance had grown very fast, and they have not always got everything exactly right, but they are improving and learning every day.

He said that the firm is actively hiring more talent and putting more processes and systems to protect its users and enhance its commitment to regulators.

Binance has been facing regulatory issues in recent weeks. In late June, the UK’s regulator banned Binance’s British unit from undertaking any regulated activity in the country. Binance was one of several companies that withdrew their applications from the UK’s temporary licensing regime because of failing to meet anti-money laundering requirements.

Regulators in Italy, Canada, Japan, and the Cayman Islands have also clamped down on the company, warning that Binance is not approved to operate in the nations.

Binance has taken measures to salvage itself from the issues mentioned above, including building out compliance partnerships, expanding its international compliance team and advisory board by 500%, and localising operations and the business to comply with local regulations.

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China’s Bitcoin hash power fell before the crackdown: Cambridge data

China’s crackdown on Bitcoin (BTC) mining due to energy consumption concerns is widely regarded as the trigger for the miners’ exodus from Asia to Western countries. But new research by the Cambridge Centre for Alternative Finance suggests that the shift in mining power started before China’s renewed scrutiny.

Reuters reported that China’s total computing power connected to the Bitcoin network, or hash rate, fell from 75.5% in September 2019 to 46% in April 2021, before the Asian country even officially announced the mining crackdown.

During the same 18-month period, the United States quadrupled its share of the global Bitcoin hash rate from 4% to 16.8% to become the second-largest producer of Bitcoin. Another country often named a potential destination for miners’ relocation, Kazakhstan, increased its share to 8% and became a primary Bitcoin producer.

After experiencing massive power outages in the mining hub of Xinjiang in April, Chinese authorities started investigating the energy consumption involved in Bitcoin mining. Officials announced strict supervision of mining activities due to carbon concerns, triggering the relocation of several industrial miners out of China.

Related: Bitcoin mining ban an easy decision for China, says Bitmain EMEA partner

Calling China’s mining ban a temporary inconvenience, iMining CEO Khurram Shroff said that the diversified location of mining facilities is great news for the rest of the world. “The Toronto Stock Exchange recently listed the world’s first Bitcoin ETF,” he exemplified, “[Canada] is already ahead of the curve, in terms of mainstreaming cryptocurrencies.”

Some experts see China’s crackdown on Bitcoin mining as an easy decision. Bitmain’s EMEA partner recently told Cointelegraph that the country is required to reduce its carbon footprint to get funding from the International Monetary Fund or the World Bank and Bitcoin mining was a convenient target to minimize energy consumption.