Chinese Investors Use Wechat Brokers to Bypass ICO Ban

Reports have alleged that many Chinese cryptocurrency investors are seeking middle-men agencies on Wechat to facilitate their transactions in order to bypass the nation’s prohibitive virtual currency regulations and access exposure to initial coin offerings (ICOs).

Also Read: Ford to Use Cryptocurrency for Inter-Vehicle Communication System

ICO Token Brokerages Allow Chinese Investors to Bypass Ban

According to The South China Morning Post, China’s ICO ban has given rise to an industry of agencies providing brokerage services to Chinese investors seeking to invest in initial coin offerings.

Said cryptocurrency middle-men are reported to be promoting their services via popular social messaging app Wechat, and are charging a significant premium for the service. One agency, An Hui Tian Ce Blockchain charges upward of ten percent on investments made in ICOs using its services. A representative of the agency indicated that clients make all payments in advance using Ethereum.

Dragonsocial, a Hong Kong-based marketing firm that specializes in assisting ICOs to promote their token sales to Chinese investors, has devoted resources to the development of what it describes as “cryptocurrency communities” on Wechat.

ICO Brokerage Agencies Advertise on Wechat

Dragonsocial’s operations officer, Cao Ming Xiu, stated that “Lots of companies launched ICOs last year, when there were a limited number of investors. We thought it was high time to provide them with a service.”

Cao Ming Xiu defended the legitimacy of Dragonsocial’s services, stating that “There were many cases in China where people posted adverts with big WeChat groups. But that goes against Chinese regulations, and we don’t do that. Rather, what we do is community-building. We don’t promote our clients and their ICOs in groups, instead, we discuss them.”

Cao estimates that more than 20,000 Wechat groups devoted to the discussion of ICOs exist across mainland China. Dragonsocial’s head of growth, Raymond Lam, stated “Some groups have hundreds of people involved,” adding that “A small percentage of them are our employees, and they lead conversations. It is through that, we help members discuss certain new projects.”

The Folly of Prohibition

The vice-president of the Hong Kong Blockchain Society, Emil Chan, believes that the challenges associated with fully enforcing China’s virtual currency ban combined with the rapid dynamism of the ICO industry may render the effective regulation of online cryptocurrency brokers an insurmountable task.

“There is actually no way to ban all unregulated dealers, [If you ban one], they’ll just set up another,” Chan said. “Where there’s demand, there will be supply. If there are gains to be made, then people will take risks.”

What is your response to the proliferation of ICO token brokerage agencies on Wechat? Share your thoughts in the comments section below!

Images courtesy of Shutterstock

Want to create your own secure cold storage paper wallet? Check our tools section.

The post Chinese Investors Use Wechat Brokers to Bypass ICO Ban appeared first on Bitcoin News.