Bitcoin Plummets After China Launches "Market Manipulation" Investigations Of Bitcoin Exchanges

Tyler Durden's picture

The price of bitcoin slid over 1,200 Yuan in heavy trading in China, crashing nearly 20%, and down more than $100 under $800 on comparable US markets Wednesday, after China's central bank said it had launched "spot investigations" on bitcoin exchanges in Beijing and Shanghai in order to fend off market risks.

The investigation of exchanges, including BTCC, Huobi and OKCoin, was to look into "possible market manipulation, money laundering, unauthorized financing and other issues", according to the statements posted on the People's Bank of China's website.

To regular readers this should come as no surprise: precisely one week ago, when Bitcoin hit record highs in China, we explicitly warned:

for those buying into bitcoin here on the momentum, most of which originates in China, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.

Well, Beijing noticed, and the "dramatic, sharp" drop in price has taken place as expected; worse with China now openly aggressive against bitcoin "manipulation" it is difficult to see where the next burst of buying momentum will come from, if only in the near term. However, one possibility is that Chinese capital control-evaders will now gravitate to other alternative digital currencies, such as Ethereum, which have so far been far less prominent among Chinese bubble chasers.

As Reuters further adds on the Chinese crackdown, authorities have been ratcheting up efforts to stop capital outflows and relieve pressure on the yuan to depreciate. The currency lost more than 6.5 percent against the U.S. dollar last year.

With bitcoin's soaring price and the relative anonymity it affords, some believe the digital currency has become an attractive option for tech-savvy Chinese to hedge against the yuan and circumvent rules that limit the amount of foreign exchange individuals can buy each year.

"Some"... such as this site, which said to buy bitcoin precisely on that catalyst back in September 2015 when it was $230. However, after surging five-fold it was inevitable that China would notice, and the time to take profit had come.


The Shanghai arm of the PBOC said it visited BTCC on Wednesday.


"The checks focused on whether the firm was operating out of its business scope, whether it was launching unauthorized financing, payment, forex business or other related businesses, whether it was involved in market manipulation, anti-money laundering or (carried) fund security risks," it said.


In a separate statement, the PBOC in Beijing, where officers visited the offices of OKCoin and Huobi, said "the spot checks were focused on how the exchanges implement policies including forex management and anti-money laundering".

A Huobi executive who declined to be named confirmed the PBOC visited their office on Wednesday, but declined to provide details. A spokeswoman for OKCoin told Reuters its platform was operating normally, and it was working with the authorities. Last week, PBOC officials meet with the three exchanges, and the central bank publicly urged investors to take a rational and cautious approach to investing in bitcoin.

Shanghai-based BTCC's CEO Bobby Lee confirmed the visit, but said he believed the company was not out of line. "We're definitely vigilant. We think we are in compliance with all the current rules and regulations of running a bitcoin exchange in China," he told Reuters by phone.

"I wouldn't call it an investigation. I think they are working closely with us to learn more about our business model and the bitcoin exchange industry. We had a very fruitful meeting today," Lee said.

Judging by today's plunge in the price of bitcoin, which has taken it back to levels just before last December's blast off, the market disagrees.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
BullyDog's picture

Nothing to see now.  Move along.

Golden opportunity to grab more physical, oh wait.  It's pretend.  ;)

Croesus's picture

Any BTC guys who are considering jumping: please take a bankster with you. Better yet, don't jump...just push a bankster off the roof.

It'll make you feel better.

Serfs Up's picture

I would gently advise any and all Chinese citizens looking to safeguard their wealth to quietly return to buying gold.

Actually, I'd advise that to anyone, so pay no attention to me.

Abitcoinbrain's picture

Shit went up too quick! Over valued 100% Its it worthless? Not even close! Backed up by processing of the largest computer system in the planet updating a ledger! That's worth something, and the market well eventually settle on that value of that! Gold is a shit investment compared to the other bubbles forming with way higher return potential. 

Rather Sit in Silver, Bitcoin And Guns than Gold!

Risk Vs Reward Ratios!


And By Bitcoin I mean Liquid USD to access Bitcoin long/short at all times! Bulls and Bears make money but FAT CHINESE PIGS GET SLAUGHTERED!!! 


The central planners's picture

Too busy "panic selling" the future or money.

Dethrone The Banksters's picture

I'm still up 60% on BTC ... and have cashed out most of my fiat investment --- so i'm pretty happy still. 

that said, definitely take a Bankster or 10 with ya if you want to go down that route!!!

GGuy's picture
GGuy (not verified) BullyDog Jan 11, 2017 7:32 AM

Paging Drybong Defecalcorn....



Paging Drybong Defecalcorn ...(The Harry Potter of BitCoin)

StackShinyStuff's picture

Don't say it three times or he will appear.  f-f-f-f-f-f-f.....

indygo55's picture

Yeah Bitcoin! That's where I want to park a hundred grand! NOT! 

I have several bitcoins. I can't spend them anywhere and it's a bitch to even transfer them to another wallet on another computer I own. I get hit with fees now just moving some to my phone for fun. And to do it any other way requires backing the .dat file then going through a bunch of BS file name changes. It's not that user friendly. 


SpanishGoop's picture

So what you are saying is  "i have nothing".

Sounds about right.


wulf's picture

Don't forget to epoxy your ethernet port...

I heard that buttcoiners do that to keep their butts secure...

Txpl9421's picture

If you are having that much trouble moving coins, you must not be doing it right.  Transfering from one PC to another should not cost you fees.  Of course, it will not be immediate.  And what are the fees?  15 or twenty cents? 

Your fake outrage is cute though.

floosy's picture

Costs me nothing to move my  Au and Ag from one tragic boating accident to another

samcontrol's picture

fuck it , i would rather lose money than have another password.

syzygysus's picture

don't worry, the gov't will need your retinal scans soon enough.   BOHICA.

2_legs_bahhhhhd's picture

If you bought from a BTC atm last Wednesday you would be down a smooth +50% this morning.

2_legs_bahhhhhd's picture

If you bought from a BTC atm last Wednesday you would now be down a smooth +60% this evening .....haha (Nelson)

Mustafa Kemal's picture

"That's where I want to park a hundred grand! NOT! "

Im with you there. However, I also have a few and they sit on a Ledger nano s, which I can hold in my hot little hand. I find it easy to send and recieve, even on someone elses computer. No, they are not easy to spend yet, but that appears to be coming. You can by phyzz on JM Bullion with it and if Kimdotcom brings up Megaupload 2.0 around Jan. 20, could be interesting. In addition to Au, Ag, Pb, we trickle stack BTC.

dark pools of soros's picture

that's a bunch of lies.  are you talking about the tiny transaction fees for miners?   All you have to do is send it to a new address on your other computer if you want to move it...  and moving a .dat wallet file is not hard, just make a new wallet on the the other computer, remove those .dat files, copy over the ones you want and then let it sync.


and yes you can spend them plenty of places around the world..  the thougths on bitcoin in this forum shows how braindead gold bugs are


Trubador's picture

Not only that, but there are over 740 cryptocurrencies out there, with only 26 of them having a market cap of $+10 million. There isn't just ONE Bitcoin. *SMH*


"Invest in Precious Metals: Gold, Silver, Brass & Lead."

SpanishGoop's picture


Not after the morning coffee and smoke.

I make a bigger dump.





Byte Me's picture

Bullish for BitMiner stocks?

Oh, wait..

Nah, let's just rip on DD, fonestar et al.

Dropthebomb's picture

But, I thought bitcoin was as good as gold! LOL! Dumbasses.

c2nnib2l's picture

where is the Bitcoin guy when you need him ! 

dasein211's picture

Time to buy!!! If you are a retard and didn't sell that rocket shot over 1,000$ than duh. It's not hard to transfer from wallet to wallet.... unless once again you are a retard. Shutting down Chinese miners only shifts it to somewhere else. Seriously. There is nothing China can do to stop Bitcoin short of shutting down the internet. Seriously, take some profit and reload. It ain't dead. But, if you still want to ONLY buy gold, a commodity with not much movement and not nearly as fun to trade than by all means buy it!!! I don't know if you anti bitcoiners realize all the stock monos say the same shit about gold every time it falls! Shut up and trade...... BITCHEZ!!!!

Stu Elsample's picture

isn't it hard to type with tears blurring the letters??


fredquimby's picture

Most ZH armchair generals are too pussy to trade crypto it seems.

ItsAllBollocks's picture

dasein211 you are absolutely right. Bitcoin went down much further 6 months ago and the anti-bicoiners are the same people who havn't yet realised the war-on-cash = digital currency and therefore can't see it for the hacks in politics.

frenzic's picture

not so much anti bitcoin

more like anti really stupid (for reasons that have been given many times now) ideas

Latitude25's picture

You've been bit sclonged if you piled in.

Stu Elsample's picture

(chuckling at the Shitcoin pundits) Gold and ammo are holding steady. And they are RIGHT HERE...not in some other person's computer hard drive.

fredquimby's picture

Yes, I have those too. We aren't fucking prepping morons you know.

Ecclesia Militans's picture

Takeaway: articifical currencies require the projection of military force to be stable.  Nes pa?

Panic Mode's picture

How come I didn't see it coming??

SpanishGoop's picture

"The plain", "The plain" is about the same level of intelligence.



RightlyIndignent's picture is down.  Has been since I checked fifteen minutes ago. isn't a major exchange, but having it dissappear would certainly be a bad thing for sliding bitcoin prices.

fredquimby's picture

DDOS . now back on line so we can still BTFD ;p

RightlyIndignent's picture

Must be a bad one . . still down here.

fredquimby's picture

$799.99 last price. Give me your log in details and I'll BTFD for you haha ;)