China cracks down on cryptocurrency exchanges ahead of digital yuan launch

The Chinese authorities continue their clearing operation against the private cryptocurrency sector ahead of the digital yuan launch.

A popular Chinese cryptocurrency journalist, Colin Wu, has reported that TokenBetter users, another trading platform for digital assets from China, cannot take their money back. The exchange blocked withdrawals amid the investigations by the police in Sichuan province.

Wu learned that after OK and Huobi, another exchange from China, TokenBetter, was investigated by the police in Sichuan, China. Earlier, it claimed to have received an investment of 50 million US dollars, but the probability is exaggerated, the journalist wrote.

Moreover, the withdrawals from TokenBetter are not available for nearly a month as the person in charge has been under investigation since October 16.  At the time of writing, the website of the exchange is not accessible, while its activity in social media stopped on October 15.

Some community members suspected exit scam as the trading platform failed to provide any explanations and just stopped all communications with the customers.

TokenBetter falls into the long line of exchanges under investigation

Notably, TokenBetter is not the first victim of the Chinese authorities' aggressive approach towards cryptocurrency exchanges. As FXStreet previously reported, one of the largest cryptocurrency exchanges, OKEx, suspended withdrawals on October 16, citing that the private key holder was working with the law enforcement authorities.

The OKEx co-founder, Star Xu, was rumored to be under residential confinement, meaning that he was suspected of a criminal offense. However, the company denied this information. 

Huobi may also be in trouble because of the alleged investigations against its Chief Operating Officer, Zhu Jiawei. The exchange downplayed the information, saying that it was false. The company tried to calm down the community and claimed that all funds were safe. However, Huobi's native token took a major hit following the news.  

China clears the path for digital yuan

The Chinese authorities have been implementing a series of strict measures towards the cryptocurrency industry ahead of the digital yuan launch. 

Thus, the People's Bank of China (PBoC) issued a draft proposal to ban selling and create yuan-backed digital tokens by private companies and individuals. If the proposed legislation is approved, the officials will have the power to forfeit any proceeds of such sales. 

In a separate development, Chinese police chased down the criminal group that laundered money with USDT via online gambling platforms, which signaled that the authorities are clearing the space from illegal activities.

Digital yuan is coming

At this stage, China is actively live-testing its new type of money. In October, the authorities airdropped 10 million digital yuans ($1.5 million) to Shenzhen citizens to see how it will be used in real life. The pilot program participants spent over 88% of the distributed coins within one week after the launch.

The Asian country started working on the digital version of the yuan in 2015, while in 2020, the coin was made available for specific customers of the Agricultural Bank of China in four key provinces, including Shenzhen. 

At the same time, the government adopted an aggressive stance towards cryptocurrencies. In 2017, it closed all large cryptocurrency exchanges and outlawed ICOs. The projects were forced to return the raised money to investors. Cryptocurrency mining is not directly banned but the authorities try to make miners' life hard by increasing electricity costs and introducing restrictions.