The National Internet Finance Association of Communist china (NIFA) warned investors that cryptocurrency exchanges located outside of the country are engaged in manipulative practices on Apr 2.

The People'due south Bank of China (PBoC)-affiliated regulator cautioned investors that many off-shore exchanges wash trade to fake trade volume and appoint in underhanded tactics to liquidate leverage traders.

NIFA cites an internal analysis of cryptocurrency markets that found more than 40 crypto assets produced trade volumes exceeding 100% of their total marketplace capitalization, while a further 70 cryptocurrencies saw daily merchandise activity equal to more than than fifty% of their market cap.

The regulator states it has identified "massive trading volumes" for numerous crypto assets despite many markets exhibiting a "relatively low price and minor marketplace values."

NIFA accuses crypto exchanges both of tampering with volume information and operating bots to wash trade in a bid to create the illusion of "false prosperity."

NIFA accuses exchanges of liquidating leverage traders

Further, NIFA accuses exchanges of intentionally shutting off their systems or staging outages to trap and liquidate leverage traders during times of peak volatility:

"Afterwards tricking investors into investing in crypto, some exchanges will manipulate the market through a range of trading techniques to have the investors' assets."

The regulator asserts that many of the exchanges fled off-shore later the PBoC's crackdown on crypto exchanges in 2022.

NIFA states that the exchanges evade authorities by frequently changing website domain names and server addresses, and by using a combination of online and offline transactions to obfuscate capital flows.

Binance takes cautious steps in China

Binance was one of the exchanges that left Communist china in 2022. During November 2022, rumors that Binance may be seeking to open an office in China began to circulate.

In March, Binance Academy launched a blockchain inquiry institute in Shanghai — comprising the establishment of Binance'due south first base of operations in Mainland china in over two years.

In January, Binance Charity committed to purchasing $1.4 million in medical supplies that would be donated to more than 300 hospitals and medical organizations in Chinese provinces at the epicenter of the COVID-19 pandemic — likely gaining goodwill with the central government.