China is currently one of the most hostile environments for the crypto industry as the Chinese government has put in place policies to restrict crypto related activity within its jurisdiction.
The country went from being one of the leaders in crypto innovation to being severely anti-crypto.
Clampdown on crypto related businesses
Chinese authorities have put in place regulations that tighten the leash on crypto related businesses, and the police service has instituted many clampdowns on businesses in the industry.
One of the most recent clampdowns by Chinese police was on a crypto project called GXChain.
Dovey Wan, a venture capitalist at Wheatpond, said that the blockchain firm has come under pressure from the Chinese police. She went on to say that GXChain’s offices have been emptied out and sealed by the police force.
She made these comments citing a video that came from Chinese social media showing police presence at the blockchain firm’s offices. The video shows an empty office building with multiple police stickers on it.
Wan added that according to her sources, which are close with the Hangzhou police, GXChain’s executives are in police custody and they are being interrogated.
It is not clear why the offices have been shut down and why the blockchain startup’s executives are being interrogated.
Wan speculates that the company may be under investigation due to its dealings with personal credit card data of Chinese citizens. She says that in China, any dealings with credit card data are considered sensitive information.
The country has had challenges with the credit card industry in the past, and it could be one explanation why there has been a crackdown on GXChain.
Effects on market performance
Since the news about the crackdown on GXChain came out, the firm’s cryptocurrency has fallen by 30% over the past 24 hours on the crypto markets.
The coin is close to falling out of the top 100 of cryptocurrencies and its market capitalization has fallen to $35 million. The coin is currently selling at $0.56 down from $0.77. If this debacle with the police continues, the crypto asset could collapse further in the markets.
Crypto scams leading to government problems with the industry
Scams are common in the crypto industry, and it is these scams that have led to the negative policies that the Chinese government has put in place as far as crypto goes.
Chinese citizens have lost billions of dollars in crypto scams and Ponzi schemes, and this has prompted the government to respond with restrictive policies.
Wan describes GXChain as one of the legitimate ICO projects in China, but it has fallen victim to the negative crypto policies in place. Chinese authorities and security services are on high alert, and the clampdowns can be expected to continue over the next few years.