Well, ironically he is quite right at this moment.
Before, even if an exchange was located in mainland China the coins were the property of customers who could have been from all over the world, but at this point, with Star Xu having all the cold storage keys (according to rumors) and being held in a Chinese prison, at this point China as a state really has a lot of coins in its pockets.
I don't believe that exchange would do such nonsense, one man alone cannot have complete control over all the BTC, and I believe that he is just one of those who have one of the multisig keys. Even if by any chance he is the only one who has access to cold storage it does not necessarily mean that he will agree to hand over those keys just like that, unless they convince him with some well-known methods of persuasion that it is impossible to say no.
I doubt it, but if they really seize those coins this bull run is done for, with the bright side being that people will think twice before storing their coins elsewhere than their own wallets.
If people did not learn anything after Mt.Gox and similar events, then I am sure that this case would be forgotten very quickly. Let's hope that nothing bad will happen in this case, and even if the Chinese authorities come into possession of a cold wallet, it is still someone's property, and they will not be able to just dump coins on market.
