(Yicai Global) March 28 -- China’s National Audit Office has published results of an audit into 60 cryptocurrencies finding widespread manipulation of value as a means to boost profits.
China has seen a growing number of virtual currencies emerge in the market in recent years, with a large number using taglines such as “decentralized”, “open source” and “uses blockchain technology” to entice users, the audit office said in an article on its official WeChat account, adding that the cryptocurrency is severely volatile and can bring huge losses to consumers.
China’s cryptocurrency sector has been subject to severe regulatory supervision since September last year when authorities banned initial coin offerings and shut down trading on the country’s trading platforms.
The NAO’s audit found that virtual currency firms mainly use four operational methods: the first one is the creation of a virtual currency which obviously commits public-related fraud; the second aims to attract consumers by making up stories; the third method involves criminal activities and the fourth relies on the use of illegal private banks.
“After spot checking and auditing 60 platforms, the Audit Office found out that none of them actually possessed the technologies that they had claimed to, nor did they have any currency functions,” the article states, adding that so-called currency value is freely manipulated by the platform itself. “Generally, this kind of crime involves a large number of people and a large amount of money,” it adds.
The audit used Big Data analysis to identify the actual controller of platforms. During the investigation, the NAO found that most accounts on one platform all belong to one individual, and they are used to issue, transfer and withdraw funds. However, one of the accounts will be only used to withdraw funds, indicating this belongs to the actual controller. This account is often used for consumer spending, for example, house and vehicle purchasing, the article indicated.