Bitcoin Plunges to $720 as PBoC Conducts Surprise Inspections of China's Largest Bitcoin Exchanges

Bitcoin’s price took a nosedive down into the $750 range today as one of China’s most prominent digital currency exchanges, BTCC (BTC China), is being inspected by the Shanghai Municipal Finance Office, along with several other inspectors from the PBoC.

According to the PBoC statement, the inspection is being carried out to determine “whether the scope of the enterprise is beyond the scope of the market, whether or not the exchange is without a license to carry out credit, payment, exchange and other related business; whether there is market manipulation; anti-money laundering system implementation; financial security risks and so on.“

BTCC has taken to Twitter to reassure customers that all is well:

There are some unconfirmed reports that OKCoin and Huobi, the largest Chinese bitcoin exchanges by trading volume, are also subject to a week-long onsite inspection by Chinese financial regulators.

Surprise onsite inspections of financial and securities companies by regulators in Asia is not a new trend. In October of 2016, the Hong Kong Securities and Futures Commission announced a review program for securities brokers as monetary damages related to fraud and hacking exceeded $100 million in Hong Kong last year.

While it is unclear what prompted the PBoC into these inspections, a recent report by the South China Morning Post states that regulators had noticed how some Chinese bitcoin exchanges (BTCC, OKCoin) became inaccessible to traders during high volatility episodes, especially rapid sell-offs, causing some highly leveraged speculators to bear large losses.