China crypto crackdown elicits Binance and Tron appeal
Updated: Nov 29, 2019
Binance Holdings Ltd. and Tron have been banned on China’s largest micro-blogging service, Weibo, amid what appears to be fresh steps to crack down on digital currency trading.
This crackdown comes after President Xi Jinping hailed blockchain as one of the core technologies spurring China-led innovations, encouraging faster development of blockchain-driven initiatives. The President's remarks vigorously incentivised companies to jump on the blockchain bandwagon, despite warnings from Chinese state media, who were increasingly cautious and warned against the frenzy.
Watchdogs in Shanghai subsequently began to issue notices calling for a cleanup of companies involved in cryptocurrency trading, and the Shanghai headquarters of China’s central bank and the city’s financial regulator said in a notice co-signed on 14 November, that local government agencies should engage with companies under their supervision and ensure they cut ties to any dealings with cryptocurrency or digital exchanges.
A Binance spokeswoman stated that Weibo suspended the exchange’s account before any notice was issued, claiming that the social media platform did not substantiate its reasons for the ban.
Binance and Tron are said to likely appeal the decision, with Tron founder Justin Sun, uncertain as to whether the Weibo account shutdown was indeed related to the government notice.
A separate announcement, published on the website of Beijing’s financial regulator on the same day, warned against the risks of illegal operations of financial-asset exchanges in the capital, but did not cite crypto specifically.
Of course, the recent volatility in China follows years of back and forth from government and regulators regarding China's stance on crypto. While the recent comments from Xi Jinping make it clear that China intends to capitalise on technology developments and IP, its concerns about rampant price speculation, fraud and capital flight, continue to cause tension in how Chinese regulators respond to Chinese crypto adoption.
It was only in 2017, where China ordered an end to exchange trading of digital currencies, however this did not dissuade any trades taking place through alternatives such as over-the-counter channels offered by exchanges Huobi and OKEx. Malta-based Binance also recently started to host OTC yuan trading.
Binance Founder and Chief Executive Officer “CZ” Zhao Changpeng stated:
We want to follow the recommendations very closely, and we want to promote the blockchain research and development. We just want to help where we can.
CZ said Binance doesn’t have an office in Beijing, following a recent report from industry publication CoinDesk that it’s planning to open one that cited two unnamed sources. The Binance spokeswoman said Monday that the exchange doesn’t have fixed operations in mainland China at the moment. There has been a bit of spat between CZ and The Block following their claims that Binance's Shanghai office was raided, and CZ saying Binance doesn't have an office in Shanghai.