China’s Central Bank Restrain Crypto Companies from Using Airdrops and Giveaways

The fight against crypto-fraud in China continues as the People’s Bank of China (PBoC), China’s central bank, has moved to tighten the noose on crypto firms. In the past year and the few months of 2018, we have seen dedicated efforts from China’s government to fight the alarming rate of crypto-crimes in the country.

In July 2017, there was a recorded number of 65 completed Initial Coin Offerings (ICOs) in China, whereas only 5 were completed before 2017. Following the tremendous spike in the number of ICOs and the rate of crypto crimes, China’s central bank made an active move to ban ICOs and this came into effect in September 2017. The ban of ICOs made most crypto startups fold up and others moved their operations overseas disguising under foreign names.

The resurgence of these disguised ICOs made China’s central bank to tighten the noose on the regulations guiding crypto activities. In July 2018, a statement was issued from the bank restating the fact that trading crypto asset is illegal in the country including those done in disguise.

Just when you think China’s crypto-investors are finally safe, a recent investigation showed that fraudulent crypto firms now distribute free tokens to customers through airdrops. According to the PBoC, these airdrops are basically disguised deceptive ICOs and are now a part and parcel of the crypto environment in China. The bank which is out to protect China’s crypto-investors stated in its financial stability report that these crypto firms may be carrying out fraudulent activities under the pretense of giveaways. The report also stated that several crypto firms that engage in distributing free tokens as part of airdrop campaigns willfully hold back a large portion of the total supply in a bid to exploit the secondary markets to make quick cash.

Following this recent development, China’s central bank has reassured the people of China and the general public that it would keep a close watch on the local markets as it continues to work with other agencies to ensure that the China consumers are protected from financial criminals.

Desperate times call for desperate measures after all. The China crypto-environment is littered with notorious fraudulent companies. If scrutinizing every crypto-related activity is the way to sniff out these fraudsters, then we can only give the regulatory bodies our support as they try as much as they can to rid the crypto-sphere of these hoodlums. You can’t be too careful. Yet, it is important to stress, that too much sniffing could completely devastate the crypto industry (and perhaps this is precisely what the Chinese government wishes).