Despite China’s crypto ban, citizens continue trading on Binance and FTX
- China’s ban on crypto trading has reportedly failed to deter some citizens from accessing crypto exchanges to trade crypto assets.
- Several Chinese traders have traded on exchanges like FTX, Binance and OKX.
China’s ban on crypto appears to have had a lesser impact on its citizens’ trading than previously believed. More than a year and a half after the country enforced its crypto ban, citizens still engaged in crypto trading.
Crypto traders from China named as FTX’s creditors
According to a recent report by Bloomberg, Chinese citizens’ hunt for alternative investment opportunities has encouraged them to violate the country’s crypto ban, which came into effect in September 2021. Industry insiders have reportedly demonstrated ways to circumvent the ban, allowing Chinese traders to access crypto trading platforms.
Caroline Malcolm, global head of public policy at Chainalysis, stated:
“Essentially, bans don’t work. The decentralized nature of cryptocurrencies and the fact that they can be transferred peer-to-peer and traded on global exchanges make it difficult for any government to completely eliminate them.”
The evidence of Chinese nationals flouting the ban enforced by Beijing can be found in the creditor profile of crypto exchange FTX’s Chapter 11 bankruptcy filing. The filings showed that traders in China accounted for 8% of the bankrupt crypto exchange’s total users, which exceeds 9 million.
According to Duan & Duan Law Firm’s Jack Ding, the ban on crypto trading is hard to enforce and largely contingent on the compliance policy of crypto exchanges. Ding represents six of FTX’s Chinese creditors who hold $10 million in FTX claims.
Several traders told Bloomberg that they traded on crypto exchanges, including Binance and OKX, despite the crypto ban. Some of these traders reportedly passed Know Your Customer (KYC) formalities using Chinese identification, which highlights the lapse in compliance by crypto exchanges.
OKX declined to comment on Bloomberg’s report. However, a Binance spokesperson stated that the exchange does not operate in mainland China or have any technology, including servers or data, based there.