Fake China Bitcoin Ban pushes BTC price below $600

March 21, 2014 15:06 UTC
BTC China was one of the first to respond to the rumour, saying they received no document about a ban.

Update: it seems there was a document, saying People’s Bank of China is looking into strengthening regulations. A ban on Bitcoin is definitely not part of it. The story is still developing, we will keep watching this closely.

Bitcoin price has been dropping significantly since yesterday. Markets were responding worried after being told the People’s Bank of China released a statement in which they stated all Bitcoin transactions should cease after the 15th of April 2014.

Banned by April 15

The People’s Bank of China didn’t hesitate to share its opinion about the virtual currency in the past. In December 2013, it barred financial institutions from handling Bitcoin transactions, moving to regulate the virtual currency after an 89-fold jump in its value sparked a surge of investor interest in the country. This made Bitcoin price take a fall that was over 20%. Bitcoin took a dive below $1000 on most exchanges. A lot of people interpreted this statement as if China was to ban the cryptocurrency altogether. In reality, the People’s Bank of China said “it isn’t a currency with “real meaning” and doesn’t have the same legal status. The public is free to participate in Internet transactions provided they take on the risk themselves.” After clarifying this, dust settled and Bitcoin price became relatively stable again.

With the Mt. Gox saga still going on, nobody would be surprised the People’s Bank of China would make a public statement again. After all, people might have forgotten their previous warning, time for a new one.  Last night, a new statement was rumored to be released. Rumored, because there was no foundation whatsoever for this. Nevertheless, people obviously panicked as was reflected in another Bitcoin price drop. The virtual currency was slowly climbing back up towards $650 but took a dive below $600 again.

As for the statement itself, it didn’t look like a warning this time, but more like a definite ban. The People’s Bank of China would have stated that it decided to ban all Bitcoin transactions, effective as of the 15th of April 2014. It’s clear that this isn’t just an every day warning. A ban on Bitcoin transactions causes real panic. So what was actually said? Nothing, it seems…

Hoax

Sina Science and Technology got in touch with a number of representatives of different Chinese Bitcoin trading platforms. The news about the ban supposedly was issued in a document to the exchanges on the 18th of March. This document contained the message that by April 15, at the latest, all Bitcoin transactions are to be stopped. However, no exchange received any form of legal document. They assured that trading is going on, and there’s no intention to stop any services after April 15.

The People’s Bank of China declined to comment on this news, which indicates that this probably was a hoax indeed. So who did throw this message into the world? Maybe somebody who wanted to see a significant drop in Bitcoin prices so he or she could buy in cheap. If so, the strategy worked. Bitcoin is trading at about $570 now, being over $600 only a few hours ago. This kind of manipulation is not what Bitcoin was made for.

You can check the statement and the exchange’s response to it here. It’s in Chinese, so Google Translate is your friend.

Update: it seems there was a document, saying People’s Bank of China is looking into strengthening regulations. A ban on Bitcoin is definitely not part of it. The story is still developing, we will keep watching this closely.

Last modified: April 20, 2014 18:34 UTC

@cryptomaniacs

Internet addict and virtual currency aficionado living in Belgium. I work in a school, where I am responsible for every computer and the entire network that keeps our students connected to the world. I love cryptocurrencies, mostly because it gives us a chance to take back our freedom. If we do this right, there are exciting times ahead!