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Chinese national radio alleges OKEx illegally trading crypto futures in China

Reporter Ren Mengyan of Chinese state owned national radio Voice of China’s “News Story” reported on May 3 alleged crypto exchange OKEx illegal trading crypto futures in China.

In September 2017, seven Chinese ministries and commissions of the Central Bank issued the “Announcement on Preventing the Risk of Issuance of Coinage Offerings”, requiring that any institution not engage in the interaction between legal currency, tokens, and “virtual currency”. All crypto exchanges have been banned in China since the offical announcement was made public.

According to the radio report,  some crypto exchange platforms set up overseas offices and websites, and continue to provide digital currency services to Chinese mainland users. They also illegally set up “contract transactions” like futures. In response to a series of problems brought by digital currency, Voice of China launched a series of reports to reveal the secret behind digital currencies.

On September 4, 2017, seven Chinese ministries and commissions, including the Central Bank, jointly issued an order to ban all exchanges. Although the major digital currency trading platforms were temporarily closed down, there are still companies that have chosen to take advantage of the rising tide of bitcoin prices.

It is reported that Mr. Li from Shenyang conducted bitcoin transactions on the OKCoin Exchange in the early days. After the national ban was issued, OKCoin transferred all user data and digital currency to the OKEx Exchange, which was established outside China.

Mr. Li said that during the initial period after the transfer of the exchange platform, customers could only exchange their own bitcoins for other digital currencies, conduct currency transactions, and later trade Bitcoin contracts. As a result, he lost the first contract transaction. More than 30 bitcoins.

Mr. Yang, who also conducts contract transactions on the exchange platform, told reporters that even though they are called “contract transactions,” they actually conduct digital currency futures transactions. They can use leverage to multiply the investment results, but at the critical moment of the transaction, the server actually The process of opening a small difference caused investors to suffer huge losses. The opening time can be long or short, but it can be as short as a dozen seconds or as long as half an hour.

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Mr. Yang believes that OKEx, as a digital currency futures trading platform, has neither the corresponding qualifications nor any supervision, and when the state requires the ban on digital currency transactions, it is only nominally moving the company overseas, claiming to be headquartered in Belize, and the team is in Hong Kong, but in fact still operates the entire company in Beijing, and the users are almost all Chinese.

In addition to suspected violations of futures trading, the OKEx Exchange also has a special “point to point” transaction to allow users to pay their Alipay or WeChat accounts when the country explicitly prohibits transactions between legal and digital currencies. The QR code was uploaded to the website. Afterwards, OKEx acted as a broker, allowing the buyer to directly scan the QR code payment of the seller and confirm the payment of the digital currency.

After OKEx also opened an “index trading”, referring to the digital currency prices in the international market, directly to the platform to buy or sell digital currency, but the digital currency can not be extracted, can only be second trading here. OKEx customer service stated that index trading is an individual’s and business’s business. The purchased currency can’t be transferred out and can only be used as investment and financing.

For example, to go to a stock exchange to buy stocks, but this exchange is not only involved in the issuance of stocks, but also a profitable company and a futures exchange. At the same time, it is also a securities media, responsible for issuing new stock information, and trading software is also what it does, and Unlike regular institutions, there is no supervisory authority to manage the goods. Customers must buy goods that cannot be delivered. In addition, it is also claimed to be an offshore institution. It has bought and sold problems and sought out the domestic fraternal enterprises. The domestic fraternity enterprises also said that they can not be held responsible. Would they have to try foreign rights protection?

According to a survey conducted by the reporters, this registration is based in Belize, a Central American country, and the Hong Kong-based OKEx Exchange, with the registration numbers of WeChat and Weibo, is a domestic company named Beijing Fenghuo Chuangjie Technology Co., Ltd., and Most of the technical team is in Beijing. However, seven ministries jointly issued a document prohibiting why OKEx can still conduct business in China?

After Mr. Yang and others found out that OKEx was involved in digital currency transactions suspected of infractions, it successively reported to the local government authority,  but local government agency did not have corresponding enforcement precedents.

In the process of communicating with OKEx’s customer service, the staffers repeatedly stated that it was an “overseas enterprise” and had nothing to do with domestically registered OKCoin company.

The phone number of overseas offices on the company’s website, the two numbers in Ireland and Russia could not be reached at all, and the numbers in Hong Kong and Singapore were unanswered. Only the customer’s response to the 400 calls in the territory was reported.

Investors believe that OKCoin and OKEx are domestic companies, and Belize registration is just a “stagger for exports to domestic sales”.

In response to the reported problems, the radio reporter has repeatedly requested interviews from OKEx, but as of this writing, no response has been received. And OKEx’s Beijing Fenghuo Chuangjie Technology Co., Ltd. was also included in the list of abnormal business operations by the Industry and Commerce Department due to its inability to contact the registered address. (Source: http://china.cnr.cn/yaowen/20180503/t20180503_524220165.shtml)

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