ICO crackdown in China
The Peoples Bank of China (PBoC) along with government officials has stated that token sales are considered as an illicit activity and startups who are offering these tokens need to issue refunds to their investors. In regard to this, a public warning has been issued that many ICOs are scams and are reckoned to be illegal in China hereafter.
- China has officially banned ICOs.
- The Peoples Bank of China declared ICOs to be illegal.
- PBoC has asked ICOs to refund their investors.
- Hours after China bans token sales, four ICO startups have refunded investors.
On Monday, Sep 4, as China imposed an immediate ban on the Initial Coin Offerings, a huge storm was created in the Cryptocurrency world. On the breakout of this shocking news about the ICO ban in China, all the major digital currencies including Bitcoin, Ethereum and Litecoin went tumbling down by more than 20%.
The Peoples Bank of China (PBoC) along with government officials has stated that token sales are considered as an illicit activity and startups who are offering these tokens need to issue refunds to their investors. In regard to this, a public warning has been issued that many ICOs are scams and are reckoned to be illegal in China hereafter. According to reports, since the PBoC’s latest announcement, some China-based ICOs are already issuing refunds.
PBoC: “ICOs should refund their investors to protect their rights and interests”
According to the PBoC, the State Administration for Industry and Commerce, the China Banking Regulatory Commission, China’s Securities Regulatory Commission, and many other government agencies, ICOs are now considered “illegal” in China. An announcement was made by a committee led by the People’s Bank of China regarding the sudden ban of the crowding efforts through token-based digital currencies. This recent announcement explains that ICO’s are unregulated in China, and these operations have been evaluated by the bank as financial fraud and pyramid schemes.
People’s Bank of China issued an official notice regarding this ban on their website. As per central bank’s mandate,
“Any kind of ICO should stop immediately on the day of this announcement. Organizations or individuals that have already completed the ICO process should refund their investors to protect their rights and interests and handle the risks. The relevant departments will seriously investigate and deal with ICO activities which refuse to stop and the illegal acts in the past ICO activities.”
This news brought an end to the ICO craze in China. The year 2017 saw a momentous increase in the market value of cryptocurrencies with Bitcoin rolling more than 400% to $5000 per coin, but after this sudden ICO ban, all the currencies have dropped drastically.
Just hours after the PBoC announcement, four ICOs were shut down and refunds were issued to their initial investors. Firms like ICOinfo and Atmatrix that hosts a variety of token sales informed about shutting down and refunding their investors. According to ICOinfo, refunds were given back to investors from the ICOs UIP, LLToken, CCC, and HMS.
A serious note of bank’s statement is being taken up by ICO startups. Moreover, the regulators plan to ban ICO websites and mobile applications, stating,
“The financial management departments will require the telecom management departments to shut down the websites and mobile applications of these platforms, and will delete these mobile applications from the App stores. And the business administration department will revoke their business licenses according to law.”
Now, based on the bank’s threats will more ICO or ERC20 startups based in China will close operations on their own accord remains a question. Similarly, in U.S. the Securities and Exchange Commission (SEC) has started asking token sale startups to initiate refunds.
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