Virtual currency haven of illusion, regulator warns

Chinese financial regulator warned of virtual currency investment risk and fake information from illegal foreign-based trading platforms.

The warning was posted by the National Internet Finance Association of China (NIFA), a national self-regulatory organization in the field of internet finance under the central bank, on Thursday.

It said some platforms have "created the illusion of prosperity" in the virtual currency market, boosting the trading volume through auto programs and tampering with the data.

Amid the recent global financial market turbulence, some foreign-based platforms attracted investors by exaggerated and false claims, saying the vital currencies are "safe haven assets which can preserve value exceeding gold and silver", the notice described.

But many investors suffered substantial losses due to the sharp price falls, and it is hard to trace back their losses as the platform operators change IP addresses much frequently, according to the notice.

Individuals and institutions are forbidden to participate in virtual currency trading or relevant speculative investment, the NIFA said.

The central bank established a special work group in 2016 to tackle risks rising in internet financing. In 2017, the government banned so-called "initial coin offerings" or ICOs, a way for startups to raise funds by selling off newly created virtual currencies.

All trading platforms for such digital assets have been closed in the country. But some ICO platforms moved their servers or registered outside China, to continue business under the radar.

The NIFA wanted the public to be on guard against fraud and illegal trading of virtual currencies transactions and report suspicious activities to regulators and public security organs.