The government that understands exchange tactics the best! The People's Bank of China warns of key risks, major exchanges all hit hard

On "International Consumer Rights Day," the People's Bank of China issued a warning graphic specifically targeting virtual currency trading platforms, highlighting several common investment pitfalls that consumers often fall into.

Facing the ravages of the pandemic, economic contraction, and zero interest rates, various countries are continuously proposing relief measures. Phrases like "an impending crisis of high inflation" are being echoed by experts and scholars. Despite being in a state of sharp decline, "cryptocurrencies, virtual currencies, and Bitcoin" may become a channel for capital flight in countries with foreign exchange controls.

On "International Consumer Rights Day," the People's Bank of China issued a warning graphic specifically targeting virtual currency trading platforms. The article mentioned the crackdown on exchanges and ICOs by the Chinese government in September 2017, pointing out that many criminals have moved their servers to overseas platforms. It also highlighted several investment traps that consumers often fall into.

Key Points Summarized-

（1）The Myth of Getting Rich Overnight

The People's Bank of China: Trading platforms manipulate prices, maliciously crash systems, causing users to be liquidated.

（2）Is Big Trading Volume Safe?

The People's Bank of China: This is a trick; trading volume can be faked. The average turnover rates of the top three overseas virtual currency exchanges are 13.25%, 8.33%, and 6.15%, several times higher than the average turnover rate of compliant foreign exchanges, with significant suspicion of volume manipulation by trading bots.
Through sampling, it was found that a certain digit in the trading volume appeared abnormally frequently, indicating that the trading volume was clearly manipulated. This is a way to attract users by creating a false sense of prosperity.

（3）Can't Close Your Position? Website Crashes!

The People's Bank of China: This is also a trick; exchanges often maliciously crash systems, such as pulling the plug on the network, preventing users from placing orders, closing positions, or canceling orders, resulting in losses or liquidations. This kind of operation usually lasts from half an hour to a day. Exchanges also take advantage of other platforms' crashes to manipulate market prices through trading bots.

Moreover, exchanges may cooperate with each other, taking turns to crash the system and manipulate market prices. A large virtual currency exchange platform experienced six system crashes within a year, three of which were sudden failures for unknown reasons.

（4）Money Laundering Suspicions

The People's Bank of China: Through the analysis of withdrawal data, it was found that criminals deposit multiple small amounts of bitcoins, then withdraw a large amount, with exchanges assisting in money laundering.

（5）Bitcoin is Not a Safe-Haven Asset

The People's Bank of China: It is a false proposition that Bitcoin is a safe-haven asset, as it has experienced multiple sharp declines.

China's Regulation is Proficient

China leads the global development of the cryptocurrency market. While not a leader in blockchain concepts and technology, its trading market and practical applications are flourishing. The enormous population base is driving investment and speculative development.

From the general warnings to the planning of digital currency for the public, the People's Bank of China's understanding of the cryptocurrency market is at the forefront globally. For China, which has strict foreign exchange controls, preventing economic risks brought by cryptocurrencies is also a major focus.

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