Hong Kong-based cryptocurrency exchange CEO Global said on Saturday that one of its founders has been summoned by authorities to participate in a 15-day investigation, adding that they have no idea when he might return.
The exchange forced to suspend all withdrawals
“Due to the ongoing national crackdown on SIM cards and fraudulent bank accounts, the bank account of one of our main founders was found to be the recipient of illicit money from international scammers,” the company said in a statement.
"The founder was summoned for 15 days by the authorities to attend the investigation." He holds the private keys of most of the platform's cold wallets. As the exchange currently cannot process all withdrawals via its hot wallets, it said it has decided to suspend all withdrawals.
Meanwhile, the platform will shut down all its over-the-counter (OTC) trading services due to the risks associated with uncertainties in China's regulatory policies, including national crackdowns.
The Chinese State Council announced in October a nationwide crackdown on those bank accounts and SIM cards that could be suspected of fraud. "SIM cards and fraudulent bank accounts are among the main causes that have facilitated many telephone and computer scams," according to the announcement.
This is not the first case of its kind in China. Last month, the OKEx exchange had to suspend withdrawals for the same reason: the seizure of one of the key holders by the authorities for some banking investigation. OKEx has recently resumed normal activities.
China's tightening on bank accounts and SIM cards is affecting thousands of people
Those who want to avoid revealing their identity when opening a bank account or SIM card, most of whom are scammers, would buy existing SIM cards in the name of others, while opening bank accounts registered under the name of others. .
Due to the high demand for these fraudulent accounts, a whole industry has developed to create and sell these accounts, some of which are obtained through identity theft. After just two weeks of the State Council's announcement, Chinese police arrested more than 4.600 people and confiscated about 65.000 bank cards linked to fraudulent bank accounts, according to a state media CCTV report.
That report also states that more than 15.000 people involved in the crimes have been banned from opening a new bank account for the next five years. Colin Wu, a Chinese crypto industry reporter, recently said that some Chinese cryptocurrency miners may have had a hard time trading their mined bitcoins (quotation BTC) or ETH (ETH) with the Chinese fiat currency with which to pay the electricity bills due to the repression.
