The Supreme Court of China declared that crypto trading will be an illegal method of fundraising, marking a new bleak chapter for crypto in the country.
Crypto trading is seen as illegal fundraising when there are four conditions met: public fundraising, unspecified fundraising targets, promising returns on capital and interest, and if activities violate laws and regulations.
Zhang Xiaoxiao, the founder of ChainAudit who provides consulting services to China’s public security departments on criminal economic activities, declared that OTC, cryptocurrency exchange, ICO/IDO, yield farming, and cryptocurrency future exchange are all within the scope of illegal fundraising.
Illegal funding that raises more than 50 million yuan (US$7,913,645) or from 5,000 people or provokes direct losses of 25 million yuan to donors can now send a person for 10 years in prison.
This will come into effect beginning March 1st.