Another High-Profile ICO in China Faces Trouble with the Law
Chinese police forces have raided the GXChain project, sealing buildings and investigating the high-profile ICO.
GXChain is the next ICO in China that faces the force of the law. The project, which reached a peak market cap of $600 million during the hottest ICO season in 2017, is now investigated, reported Dovery Wan, co-founder of Primitive Crypto.
Previously, Wan had warned of the debacle of Plus Token, a large-scale scheme that was active on the Asian markets. The recent GXChain investigation follows a series of crackdowns against ICOs, especially in the US. After about a year of free-for-all fundraising, the potential for fraud and personal finance risk alarmed regulators. Some of the projects turned out to be outright scams, also triggering police investigations.
Investigations against ICO projects also caused skepticism about the wave of assets that arrived in 2017. A series of delistings and lowered trading volumes virtually erased the hype and interest surrounding most previously hot projects.
GXChain reached a peak dollar price of above $10, and in the initial stages of trading, went as high as 0.002 BTC. But the bear market deeply affected the coin. The latest news of the investigation led to another crash, as the token erased more than 22% overnight, crashing to $0.58.
GXC is also down more than 23% net for the week, though the loss was precipitous and only happened within a short time frame on Thursday.
GXC is a high-profile coin, with significant activity on Huobi Global and Binance. With more than $32 million’s equivalent in trading, it lines up among more active altcoins. An investigation and the subsequent panic may spill over as more general market panic.
The project also received a high rating for its technology based on the regular Chinese state rating of crypto projects:
Chinese authorities have been extremely wary of ICO projects, due to the high percentage of scams and schemes that contacted investors directly. GXChain was seen as a warning that a high-profile crypto startup could face direct government repression, unlike public, leaderless blockchains.
The aim of GCChain was to build a decentralized system for computation, data storage, distribution and other information infrastructure tasks.