Founding father of the Crypto Alternate in Hong Kong on China's crackdown on fraudulent financial institution accounts
Crypto Exchange's Hong Kong-based CEO, Global, said one of its founders was taken away from the agency on Saturday to help with an investigation for 15 days and has no idea when to return.
"The bank account of one of our main founders has been affected by the ongoing national crackdown on fraudulent SIM cards and bank accounts and has received illegal money from international scammers and fraudsters," the company said in a statement. "The founder was taken away for investigation for 15 days."
The founder owns the private keys for most of the platform's cold wallets. As the exchange cannot currently process all withdrawals through its hot wallets, it has decided to suspend all withdrawals.
In the meantime, the platform will close all over-the-counter (OTC) trading services due to the risks associated with uncertainties from China's regulatory policies, including the national crackdown.
The State Council, China's cabinet, announced national crackdown on fraudulent bank accounts and SIM cards in October. "Fraudulent SIM cards and bank accounts are among the main causes that have enabled many phone and cyber scams," the announcement said.
Individuals who wish to avoid exposing their teeth when opening a bank account or SIM card, most of which are scammers, would buy existing SIM cards and bank accounts registered under the names of others.
Due to the high demand for these fraudulent accounts, an industry has developed to create and sell these accounts, some of which are obtained through identity theft. Within two weeks of the State Council's announcement, Chinese police arrested more than 4,600 people and confiscated around 65,000 bank cards associated with fraudulent bank accounts. This emerges from a report by the state media CCTV.
According to the report, more than 15,000 people involved in the crimes are banned from opening new bank accounts within five years.
Colin Wu, a Chinese crypto reporter, recently said some Chinese crypto miners may have had difficulty exchanging their mined Bitcoin or ETH for Chinese fiat currency due to the practice in order to pay their utility bills with a bank card.