Chinese shift $4bn in Bitcoin

A STUDY of Bitcoin trading has found that Chinese traders used the cryptocurrency to export $4.6bn of wealth out of the country, circumventing the country’s strict capital outflow restrictions.

The restrictions, covering amounts above $US50,000 a year, are intended to control the value of the yuan.

A research report by Australian and Chinese academics says almost 8.78 million bitcoins were traded by Chinese nationals between September 2011 and February 2018 in a bid to circumvent capital controls.

The report, Evading Capital Controls via Cryptocurrencies: Evidence from the Blockchain, says the US is the most popular country for Chinese capital flight via cryptocurrency, with $US577.06m sent to crypto exchanges in the country between 2011 and 2018.

The researchers say Chinese traders sent $US2.82m to Australian crypto exchanges during this period.

But the research, published in December, does not detail the final destination for the funds, only the country in which the exchange is located.

“Over one-quarter of trading volume in Chinese bitcoin exchanges is estimated to be involved in circumventing China’s capital controls,” the researchers report.

“It is likely that capital flight contributes to the congestion on the blockchain that then results in higher fees for all users, not just those engaged in capital flight.”

The researchers include Australian Talis Putnins, who has briefed the Australian Securities & Investments Commission on groups within Australia that pump up the prices of cryptocurrencies and shares, Maggie Hu from the Chinese University of Hong Kong, and Adrian Lee from Deakin University.

Mr Putnins had highlighted to ASIC pump and dump schemes involving 23 million participants using social media or encrypted messaging platforms such as Telegram.