When President Xi Jinping adored blockchain technology as an opportunity that China should dive into last month, many took it as a hopeful sign for the cryptocurrency market.

This optimistic interpretation led to the return of uncertain fever surrounding not just significant cryptocurrencies but also claimed crypto pump-and-dump schemes. 

After rallying as much as 30% within hours of Xi’s speech, the price of bitcoin had dropped down to a point even lower than it was before his remarks and dipped to a six month low below $7,000 on Monday.

“I’ve called out myriad times already the initial pump is a reaction, so a correction is well anticipated, especially under the known CCP’ carrot and stick’ strategy.” tweeted Dovey Wan(Primitive Ventures).

Crypto news site ‘The Block’ reported last week that Binance’s Shanghai office had closed down. The exchange’s CEO, ‘Changpeng Zhao,’ initially refused that it even had an office in Shanghai and took resentment at the publication’s request; there had been a “police raid.”

The Block later moderated the phrase to “visit by authorities,” but according to sources, Binance has undoubtedly had a presence in Shanghai for some time. 

Dragon Television, a Shanghai local broadcast station, displayed in a program on Monday night that Binance’s Shanghai office was shut and added the office was used by outsourced customer service staff and some developers. 

 Air Coins

The leader’s remarks briefly rejuvenated the local community. 

From November 8-9, more than 4,000 people attended the ‘World Blockchain Conference’ in Wuzhen, China, according to the event organizer ‘8btc’. Spokespeople included representatives from traditional tech firms like Baidu, Tencent, and Alibaba. It also included those who are working in crypto exchanges, funds, projects, and mining businesses.

Further supporting a cheerful outlook, a few days after Xi’s speech, the country’s top economic planning agency rejected a proposal that would have recommended scrapping crypto mining from China.

But then Beijing began crushing the screws.

On November 14, the People’s Bank of China’s Shanghai Bureau circulated a notice to local government agencies in every district in the city to investigate and clear out businesses that extend crypto trading, promotion, fundraising, and brokerage services. It later officially published the circular on its website, declaring that it plans to snap the growing crypto fever in the bud.

And obviously, this is a nationwide effort. On Thursday, the ‘Shenzhen Municipal Financial Regulatory Bureau’ issued a similar notice, promising to scrap down on fraudulent schemes that use blockchain as a marketing trick and initial coin offerings without any technological substance.

 CCTV (China Central Television), a mouthpiece of the Chinese government, stated in an article on Sunday that this is just the start as multiple cities, like Beijing, Shenzhen, Shanghai, Hangzhou, have all started taking the same measures.

 The crackdown has so far principally targeted at “air coins” that are issued out of thin air without any real team as well as smaller exchanges that would pump and dump these coins prices.

A Chinese government-backed report last week even alleged that 25,000 out of the 28,000 blockchain firms primarily based within the country issued cryptocurrencies via extrajudicial or illegal fundraising channels. 

As a result, multiple state-owned media, together with CCTV, Economic Information Daily, Xinhua, and Securities Times, have all published news coverage in the past week to their nationwide audience concerning the return of “air coins” and also the country’s crackdown efforts. 

Safety concerns

Meanwhile, trading services of major exchanges by volumes like OKEx, Huobi, and Binance, which still serve Chinese investors, have not been impacted by the crackdown lately.

That said, there are indications that these trading platforms have taken a step behind, at least for the time being, in relation to promotional activities, operations, and marketing.

For example, OKEx’s official Chinese-language Weibo account had been regularly posting daily updates of cryptocurrency market analysis, announcements regarding listing specific tokens and its Jumpstart initial exchange offering activities.

Yet since November 14, the firm’s ‘Weibo account’ has so far been only publishing posts on blockchain 101, and news about blockchain applications.

 The official Weibo accounts of Binance and blockchain project Tron are still halted due to user complaints of violating laws, regulations, or Weibo’s service terms.

Further, many of the blockchain and crypto-themed events originally scheduled in Shanghai in recent weeks had been either canceled or scaled-down, according to two event organizers, who spoke under the provision of anonymity due to safety concerns.

One organizer said the surge of cancelations was due to safety reasons or venue providers declined to cooperate between the crackdown news, even though the events were to discuss blockchain technology and crypto-economics in general. 

The crackdown on exchanges that are encouraging speculation has also led to ‘WeChat’s‘ ban of several accounts that write content about crypto trading to subscribers.

So far, the WeChat account of almost three bloggers, literally translated as “Crypto Bond,” “One Coin,” and “Trading Class” are all unavailable on WeChat. Viewing the account information, it guides to a page that states: “Content is inaccessible as this account is banned after WeChat’s analysis of users’ complaint of the account breaking related laws, regulations, and policies.”