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China's two biggest bitcoin exchanges, Huobi and OKCoin, invested about $150m of idle client funds into risky high-yielding investments for their own gain, according to an investigation by the People's Bank of China.
Yesterday (Aug. 21) Xinhua also published a rare commentary (link in Chinese) warning against bitcoin’s recent price surge. “New things are developing so fast that regulations must keep pace,” the article said, calling on the government to shut down dubious bitcoin exchanges and to “never be soft” on them. The Xinhua report didn’t provide more details about the financial products Huobi and OKCoin invested in using those client funds. While bitcoin exchanges in the US and Europe typically hold client funds rather than use them, the same doesn’t apply to their Chinese counterparts.
