ICO is banned for allegedly illegal financing in China

On September 5, after PBOC (The People’s Bank of China) and six other administrations jointly issued Statements on Guarding against Risks of Initial Coin Offerings, a number of platforms suspended new businesses of ICOs and some even halted token withdrawal services.

According to incomplete statistics, up till now, many ICO platforms, including birengou, vdpax.com, 91ICO, bitouzi, bizhongchou, and GOGOICO, announced a temporary halt to new ICO projects and provided a channel for token refund.

Among them, GOGOICO halted all new ICO projects, cooperated with regulatory department in reorganizing and clearing the existing ICO projects, and canceled ICOs like CDN and AIC.

Long before PBOC’s warning statement, BTCCHINA.com, one of China’s major platforms for digital currency trading, declared a suspension of trading. On September 2, it announced it would halt the recharge and trading of ICOCOIN from the day on and the withdrawal of tokens from 6 p.m on September 3, 2017. Investors should have refund before the deadline.

“Recently because ICO regulation has still been under discussion and related clauses have yet to be written, BTCCHINA suspended ICO trading and would consider restarting the trade after clear regulatory clauses are written,” ICOCOIN’s statement said, “ICO trading is normal on the BTER.com, jubi.com, btc9.com, szzc.com.”

On the afternoon of September 4, PBOC and six other agencies, namely Cyberspace Administration of China, Ministry of Industry and Information Technology, State Administration for Industry and Commerce，China Banking Regulatory Commission, China Securities Regulatory Commission, and China Insurance Regulatory Commission, jointly issued Statements on Guarding against Risks of Initial Coin Offerings targeting recently booming ICO financing activities, mass speculations, and allegedly illegal financing. In this official statement, the PBOC announced that organizations and individuals are no longer permitted to raise funds via ICOs. “Token fundraising” refers to a process where fundraisers distribute digital tokens to investors who make financial contributions in the form of cryptocurrencies such as bitcoin and ether. By nature, it is an unauthorized and illegal public financing activity, which involves financial crimes such as the illegal distribution of financial tokens, the illegal issuance of securities and illegal fundraising, financial fraud and pyramid scheme.

PBOC demands all organizations or persons shall not engage in illegal fundraising via ICOs. Starting from the date of this announcement, all kinds of fundraising activities through token issuance should stop immediately. Meanwhile, any so-called token exchange platform shall not:

• Be involved in offering exchange services between fiat currency and tokens or “virtual currencies”.
• Buy or sell tokens for cryptocurrencies, or act as a central party facilitating the trading of tokens for cryptocurrencies
• Provide price bidding or middleman service for the exchange of tokens for cryptocurrency.

No financial institutions or non-banking payment institutions shall operate businesses that deal with token fundraising.

This article originally appeared in LanjingTMT and was translated by Pandaily.

Click here to read the original Chinese article.