Chinese financial authority issues a new warning for crypto users

Chinese financial authority issues a new warning for crypto users

  • Ali Raza
  • 3rd April, 09:14
  • Chinese financial watchdog recently issued a new warning for crypto users.
  • NIFA warns that foreign exchanges, might fake volumes to manipulate trading decisions.
  • The watchdog warns that many exchanges had too big trading volumes while the prices are dropping.

China’s financial watchdog, NIFA (National Internet Finance Association) recently issued a warning for crypto investors. NIFA worries that many of those who deal with crypto might not be aware of the potential risks of investing in crypto. The major issue, according to the warning, is manipulation.

Manipulation is still strong in the crypto industry

Of course, manipulation has always been a concern within the crypto industry. However, with many viewing crypto as a safe haven during the current global crisis, they might fall victim to it easier now.

While crypto trading is still not supported in China, many of the country’s citizens trade on foreign exchanges. Such exchanges tend to fake trading volumes, according to NIFA’s data analysis. The warning also states that some exchanges have compared crypto to the likes of gold and silver. The tax watchdog sees this as misleading information which may deceive gullible investors. After all, many have seen significant losses when the crypto prices crashed due to coronavirus fears.

NIFA stressed that:

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 percent, while more than 70 coins’ rate exceeds 50 percent.

It added that there were massive trading volumes, despite the low prices. In other words, the watchdog seems convinced that trading platforms have created ‘false prosperity.’

Exchanges are faking their data, NIFA warns

With the most popular exchanges being fully centralized, they could, in theory, temper with statistics. They might also use robots to create fake trading volumes. NIFA also says that there are some platforms whose trading volumes are completely made up. They achieved this simply by copying data from more successful platforms.

Further, this centralization also means that exchanges can do whatever they want with investors’ assets. They could freeze them, fake a system breakdown, or even completely shut off. This would make it impossible for investors to close a position. As a result, they would suffer losses, supposedly due to technical issues. Naturally, traders who deal with high leverage are in the most danger, NIFA warns.

Finally, NIFA also notes that most crypto exchanges operate outside of China. With trading in the country banned, not a lot of crypto businesses aimed to operate from within the country. This has made it difficult for the watchdog to obtain information from these institutions, and assess traders’ losses.

By Ali Raza
A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications. Raza is the co-founder of, too, a site dedicated to educating people on 5G technology.

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