Beijing cracked down on digital assets over concerns about money laundering, currency outflows and the environmental impact of Bitcoin mining. The likes of the Binance, OKX and FTX exchanges had tapped risk-loving investors in China, once the world’s biggest market for Bitcoin trading, to boost growth.

Interviews with Chinese investors point to the compliance challenge. Four said they had traded on the Binance digital-asset platform, and a fifth said he’d also used OKX, after Beijing’s prohibition. 

  “Essentially, bans don’t work,” said Caroline Malcolm, global head of public policy at Chainalysis, which specializes in tracking digital-asset transactions. “The decentralized nature of cryptocurrencies and the fact that they can be transferred peer-to-peer and traded on global exchanges make it difficult for any government to completely eliminate them.”  

US bankruptcy filings for FTX, which collapsed in November last year, show Chinese users accounted for 8% of the exchange’s customers. FTX advisers have tallied more than 9 million customer accounts overall, while claims from creditors amount to at least $11.6 billion.