The National Internet Finance Association of China (NIFA), a self-regulatory organization set up by the People's Bank of China, said that cryptocurrencies overseas exchange fake trading volumes.
The analysis of the National Internet Finance Association of China
According to its analysis published Thursday, NIFA said that foreign-based cryptocurrency exchanges use "robotic programs to fix and tamper with data to create the illusion of" prosperity "in the virtual currency trading market."
For example, exchanges can prevent investors from trading by closing their systems, freezing assets or staging a system failure. Some investors would not be able to close a position and would therefore suffer many losses, especially those who trade with high leverage.
NIFA also added: “In our sampling analysis based on trading data from some of the exchanges, the daily turnover rate of over 40 coins is greater than 100%, while the rate of over 70 coins exceeds 50%. Despite the relatively low price and reduced market value, there have been huge trading volumes. "
A problem already known in the crypto community
Manipulating the crypto market has already been a concern in the past. Last year, Bitwise claimed that around 95% of the exchange volume reported in bitcoin is fake. The Block conducted its research on the topic during that time and found that around 86% of the volume of cryptocurrency exchanges is likely to be untrue.
NIFA also said that cryptocurrency exchanges use "various gimmicks" to attract consumers' attention. For example, some platforms have started to "promote" the concept that "virtual currency is a better safe-haven asset than gold and silver", but according to NIFA, this is not true.
In fact, The Block conducted further research last week and found that bitcoin, which is currently in a bear market, has significantly underperformed gold. In particular, NIFA also claimed that the operating entities of cryptocurrency exchanges are "relatively hidden".
Their offices and corporate development areas are often different, and consumers are unable to determine the identity of these operators, according to the Chinese supervisory body.
China's battle against cryptocurrencies continues
Because of these concerns, the National Internet Finance Association of China has advised consumers not to engage in cryptocurrency exchange activities.
Cryptocurrency exchanges have actually been banned in China since 2017, but as long as their servers are outside of China and transactions are conducted peer-to-peer (P2P), it is always possible to do business in the country. Bitcoin Profor example, offers trading for bitcoin (BTC), ether (ETH) and Tether (USDT) against the Chinese yuan (CNY) and other international currencies.
And how do you trade your cryptocurrencies? Do you prefer exchanges, so to speak, classics or automatic trading platforms? Let us know in the comments below.