Chinese National Media Alleges OKEx Is Illegally Trading Bitcoin Futures in the Country

  • Chinese national media recently claimed OKEx, one of the largest cryptocurrency exchanges, has been illegally trading bitcoin futures contracts in the country.
  • The report cites two alleged investors, Yang and Zhao, who've used the cryptocurrency exchange's services.

China National Radio (CNR), in its “Voice of China” podcast, has recently alleged that cryptocurrency exchange OKEx has been illegally trading bitcoin futures contracts in the country, following a ban imposed by the government last fall.

Through a piece titled “Exchanges that still prevail after the ban”, CNR claimed OKEx, a Hong Kong-based company launched by OKCoin, one of the “Big Three” trading platforms in China before the crackdown, is offering said contracts to mainland Chinese investors.

The media outlet cites two sources, Yang and Zhang, who reportedly used OKEx’s services in the country. According to the two investors, OKEx is operating in Beijing for Chinese users, and has only moved its headquarters to Hong Kong on paper. The company is, per the report, registering itself in Belize to dodge regulations.

The investors allege OKEx is trading bitcoin futures and giving investors the option to use leverage on these, while calling them “contract transactions.” The report reads (roughly translated):

“Mr. Yang, who also conducts contract transactions on the 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…”

CNR's report

The report further adds OKEx runs a “point to point” operation that lets investors pay using their Alipay or Wechat accounts, bypassing China’s crypto to fiat transaction ban. The cryptocurrency exchange’s technological developments, per CNR, are still managed by the OKCoin team.

CNR notes that Yang and other investors have reported OKEx to the country’s authorities, and were told that the Financial Bureau was working on the case. It’s worth noting the Chinese media outlet’s report is part of a cryptocurrency investigation series it’s broadcasting, that yesterday claimed initial coin offering (ICO) operators are still selling tokens to Chinese investors.

Last fall, China banned cryptocurrency exchanges from the country citing “financial risks.” As recently covered, the country’s largest website have removed cryptocurrency-related ads from their platforms.

At press time, OKEx is the second largest cryptocurrency exchange by trading volume, processing $1.9 billion in the last 24-hour period.

Making the Case for Bitcoin as a Tool for Freedom

The rise of Blockchain technology, cryptocurrencies, and specifically Bitcoin has been received differently in different parts of the world. The heavily industrialized western nations have taken to Bitcoin quite well. The right infrastructure has been built and set up, with companies slowly beginning to warm up to the new technology. Though there is still a lot to be done as far as merchant adoption and international payments, countries such as the United States are setting trends in this industry.

Asian countries such as Japan, Singapore, and South Korea are threatening to overtake western countries though. While countries such as the United States and the United Kingdom struggle with regulatory issues, these Asian giants have created regulatory sandboxes to enable a thriving cryptocurrency environment. Then we have oceanic countries like New Zealand that have set the bar by not only creating regulatory havens, but also setting up clear crypto tax guidelines. The island nation caught our eye here at Monfex by going as far as legalizing crypto remuneration for employees.

Bitcoin the popular alternative

Developing countries of the world have had a somewhat different kind of interaction with cryptocurrencies. A lot of the interactions between the developing world and cryptos have been centered around some kind of strife. Venezuela, for instance, has been looking into cryptos to reduce the effects of biting sanctions. Since the fallout between the Nicholas Maduro regime and the US government, the country has been trying to replace the local fiat Bolivar, with a local cryptocurrency. These efforts have borne little fruit, and a lot of citizens have had to turn to Bitcoin for exchange.

Nigeria, which is the most populous Black Country and the largest African economy, is also interacting with cryptocurrencies. Monfex.com has learned that Nigerian youth have picked an interest in Bitcoin in large numbers since they prefer it to the local Naira. Recently revised banking regulations in the country have seen even older generations start to take an interest in Bitcoin as well. The increased bank interest rates coupled with the hiked transaction fees have made Bitcoin very active to Nigerians, though the country has not done much as far as regulation is concerned.

Bitcoin for financial Freedom    

Bitcoin’s reach throughout the world has been impressive. Though countries and regions have varying crypto infrastructure and have had different experiences with Bitcoin, there is a commonality as far as their attraction to Bitcoin. All the regions mentioned whether developed or developing are attracted to Bitcoin because of its decentralized nature. The fact that it’s not controlled by centralized entities and can facilitate anonymous transactions is very attractive. This does not mean that these country’s central banks and governments are crazy about Bitcoin, but common citizens and investors are.

The freedom that comes with Bitcoin was best described by Nigerian American LA Chargers offensive tackle Russell Okung. In an interview with the ‘what Bitcoin did podcast’, Okung said that his experience as an athlete since he was little had taught him the value of personal independence and sovereignty.

“When I explain Bitcoin or at least when one of my teammates asks me, I say, ‘Well, what is freedom? What is independence?”

Okung has been talking up Bitcoin for a while now through his Twitter account. Crypto savvy fans have showered him with crypto material since he first showed an interest in Bitcoin. He explained how he preaches the gospel of Bitcoin to some of his teammates.

Okung’s message resonates with a lot of people, though Bitcoin has had its massive critics. Billionaire Mark Cuban recently said that he would rather invest in Bananas than in Bitcoin. Billionaire investor Warren Buffett is also not a big fan of Bitcoin. The two Billionaires have been called too old-school because they prefer investing in things they can see and touch. The price volatility question has also hurt Bitcoin. The merchant adoption boom that was being seen in Asia and parts of North America last year has slowed down. The slowdown has largely been due to regulatory uncertainty in most countries. The other major reason is price volatility. Low Margin businesses have been finding it difficult to accept BTC payments because of constant price fluctuations.

The Rise of Stablecoins

As Bitcoin struggles to gain ground in the market, stablecoins are beginning to gain more and more attention. Stablecoins are seen by many in the crypto world as the answer to Bitcoin’s volatility. This is because they solve the volatility challenge that plagues Bitcoin. Their stability is due to the fact they are backed by stable Fiat currencies unlike Bitcoin. Stablecoins are enjoying massive adoption rates at the moment as major corporations struggle to develop stablecoins of their own.

Stablecoins such as Circle’s USDC which is backed by the US Dollar are getting adopted fast. Circle just announced that its USDC will be accepted as tax payments currency in Bermuda, while Terra announced just a few days ago that its Stablecoin will be adopted by Korea’s largest retailer. The fact that Telegram and Wal-Mart are both working on their Stablecoins as well should tell you that the Stablecoin craze is not about to end. Does this mean that Bitcoin has lost its appeal?

Bitcoin still the major attraction

Bitcoin is far from losing its appeal. Though there has been a dip in price, Bitcoin remains the largest digital currency by market cap. Stablecoins appeal to businesses because of their stability, but the fact that they are backed by Fiat currency maintains Bitcoin’s appeal. Bitcoin unlike these Stablecoins is a decentralized currency that is independent of control by any centralized institutions. The most talked about Stablecoin which has been touted as a possible Bitcoin Killer Libra, is currently facing many woes. It has been the subject of international and domestic scrutiny, with many law makers advising Facebook to suspend the project. Congressman Warren Davidson of Ohio has gone as far as asking Facebook to abandon the Libra project and adopt Bitcoin instead.