Bitcoin's spiking prices have been driven almost entirely by Chinese money-launderers trying to beat the country's currency controls — controls that have tightened so much that it's tanking the world's real-estate markets as offshore buyers abandon their deposits and disappear.
Now, China's top three Bitcoin exchanges have frozen all withdrawals for 30 days.
Multiple private Chinese Bitcoin mining operations have more than enough compute-power to overwhelm the blockchain and tank Bitcoin altogether (and have refrained thus far because Bitcoin is worth more to themselves as working mechanisms than as cautionary tales about the problems of proof-of-work), so this isn't anything like the nuclear option for the Chinese government.
Starting with January 2016, the People's Bank of China introduced harsher regulations for crypto-currencies, aimed at countering money laundering.
The new "inspection and verification system," which Chinese traders are currently implementing, is meant to ensure that no person buys and moves a foreign currency over a limit of $50,000.
The central bank also started investigations into the practices of several Bitcoin trading platforms that were offering too-good-to-be-true offers, such as zero-trading fees.
Ever since authorities have cracked down on the local Bitcoin traders, Chinese Bitcoin users have moved operations overseas.
Coindesk, a cryptocurrency-centered news portal, points to a virtual exodus of Chinese users to other traders, with trading activity visibly going down at The Big Three.
[Catalin Cimpanu/Bleeping Computer]