China is now policing cryptocurrency by targeting WeChat accounts

Massive bets.
Massive bets.
Image: Reuters/Bobby Yip
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Tencent is giving Chinese authorities a helping hand in cracking down on cryptocurrencies.

Last night (Aug. 21), WeChat, Tencent’s messaging app with a billion users, permanently closed a number of public accounts that provided news and updates on the cryptocurrency and blockchain ecosystem. At least nine accounts have been taken down, according to financial-news outlet Caixin (paywall, link in Chinese), including crypto-focused media outlets Coindaily, Huobi Zixun, Shenlian, and Caijing—considered some of the most influential news accounts (link in Chinese) on WeChat.

WeChat said that (link in Chinese) some accounts had violated China’s regulations for instant-messaging services (link in Chinese), though it didn’t specify which rules. It later told reporters the accounts were suspected to be issuing initial coin offerings (ICO) and spreading rumors on cryptocurrency trading.

China is famously mixed about cryptocurrency. After it banned crypto trading and ICOs, the country’s central bank decided it would take a stab and develop its own digital currency. Now it’s using WeChat to tighten the flow of information around cryptocurrencies. The shutdown is part of the larger effort to regulate social media like WeChat, an important channel for crypto traders in China to discuss and trade, Caixin reports, citing people close to China’s regulatory authorities. It’s likely the next round of clean up will hit apps.

Though the news was a blow to China’s crypto community, it didn’t catch everyone by surprise. “We’ve sensed [the tightening up] coming half a month ago, and have prepared for it, but we weren’t able to escape it,” Wang Peng, founder of Shenlian, wrote in an internal letter to employees that was obtained by Quartz. “This is the beginning of Shenlian and our chance. We will be 100 times better than what we are now.”

The company didn’t respond to queries about Wang’s letter, but one of its investors, who did not want to be named, told Quartz it had about 60,000 followers on WeChat and that Shenlian, which closed a 10 million yuan ($1.6 million) round in March (link in Chinese), hadn’t tried to raise funds via ICOs. “Tencent’s reason should be read as a signal and warning to those who are outspokenly supporting ICOs,” the investor said.

If people do want to learn about crypto, China would rather it be through official channels. This month, the Chinese Communist Party published Blockchain—a Guide for Officials, a compilation of 20 articles previously published on state-owned media like People’s Daily and Guang Ming Daily.