Crypto exchange CEO Global, based in Hong Kong, said Saturday that one of its founders has been taken away by the authorities and it has no idea when he will return.
“The bank account of one of our core founders has received illicit money from international fraudsters and scammers, affected by the ongoing national crackdown on fraudulent SIM cards and bank accounts,” the company said in a statement. “The founder was taken away for an investigation for 15 days.”
The founder owns the private keys to most of the cold wallets on the site. Since the exchange can not process all the withdrawals through its hot wallets at present, it said it has decided to suspend all withdrawals.
In the meantime, because of the risks related to uncertainties surrounding Chinese regulatory policies, the platform will close all its over-the-counter (OTC) trading services.
A national crackdown on fake bank accounts and SIM cards was declared by the State Council, China’s cabinet, in October. According to the announcement, “Fraudulent SIM cards and bank accounts are among the root causes that have made possible many phone and cyber scams.”
When opening a bank account or SIM card, many of whom are scammers, people who want to escape disclosing their identity will buy existing SIM cards and bank accounts registered under the names of others.
An industry has grown to build and sell these accounts, some of which are obtained through identity theft, due to the high demand for these fraudulent accounts. According to a report by state media outlet CCTV, the Chinese police detained more than 4,600 people and confiscated about 65,000 bank cards connected to fake banking accounts within two weeks of the State Council’s announcement.
According to the report, more than 15,000 persons involved in crimes are barred from opening a new bank account in five years.
