I explain what was going on:
most chinese exchanges were allowing withdrawals on ANY zhifubao account (chinese paypal copy), meaning that money laundering was never this easy.
Think this: I transfer 10 bitcoins to my account (that could be registered with a fake name, since no verification is done) and then I could convert to chinese yuan and withdraw to unlimited different zhifubao accounts (difficult to track). At that point, could withdraw to a real bank account.
There's a limit to every chinese on how many dollars can receive every year (I think $50000).
Suppose there's a guy that wants to get $1 million to china without paying taxes.
Step 1: buy 1000 bitcoins
Step 2: convert them to 5 millions yuan
Step 3: withdraw them to 100 different zhifubao accounts
Step 4: go to countryside and pick up 100 random people saying "hey i give you 100 yuan if you help me"
Step 5: deposit from zhifubao and withdraw in their name
Step 6: Congrats: you transfered 1 million dollars illegally avoiding taxes
That's why china government got angry, any government in the world won't like this, not just china
In fact, now btc china is requiring id verification and will only do bank transfers in the same registered name of the account.
And at its peak, btc=>yuan rates were so high that you could make a very nice arbitrage and easy money if you bought bitcoins in dollars, then convert to yuan, then dollars again (make $20 every $1000)
Now the game is broken, you lose $40 every $1000 converted
most chinese exchanges were allowing withdrawals on ANY zhifubao account (chinese paypal copy), meaning that money laundering was never this easy.
Think this: I transfer 10 bitcoins to my account (that could be registered with a fake name, since no verification is done) and then I could convert to chinese yuan and withdraw to unlimited different zhifubao accounts (difficult to track). At that point, could withdraw to a real bank account.
There's a limit to every chinese on how many dollars can receive every year (I think $50000).
Suppose there's a guy that wants to get $1 million to china without paying taxes.
Step 1: buy 1000 bitcoins
Step 2: convert them to 5 millions yuan
Step 3: withdraw them to 100 different zhifubao accounts
Step 4: go to countryside and pick up 100 random people saying "hey i give you 100 yuan if you help me"
Step 5: deposit from zhifubao and withdraw in their name
Step 6: Congrats: you transfered 1 million dollars illegally avoiding taxes
That's why china government got angry, any government in the world won't like this, not just china
In fact, now btc china is requiring id verification and will only do bank transfers in the same registered name of the account.
And at its peak, btc=>yuan rates were so high that you could make a very nice arbitrage and easy money if you bought bitcoins in dollars, then convert to yuan, then dollars again (make $20 every $1000)
Now the game is broken, you lose $40 every $1000 converted
If so, then the fault was with Zhifubao, and not with BTC-China. I don't understand the logic in banning BTC, while allowing Zhifubao to operate freely.