“Taiwan’s blockchain industry is also in jeopardy!” the CommonWealth Magazine- known for its in-depth information on Taiwan and the greater China region- issued the warning in its news report.
The warning is not unfounded. Since August 2018, blockchain-related activities in Taiwan have become increasingly frequent. Taiwan’s booming crypto scene is inseparable from the Chinese cryptocurrency market.
In mid-August, Fortune Plus Holdings Ltd. was incorporated in Taipei and backed up by Charles Xue, a billionaire venture capitalist and one of the most active investors in the Chinese internet industry. On August 26, the “Asia Blockchain and Encrypted Currency Forum” was held in Taipei. Out of the 31 invitees, 29 of them were from mainland China. Similar to what happened in mainland China at the beginning of the year, the topic of blockchain has also become a hot spot in Taiwan. Behind this craze, questions from different authorities on the crypto market have never stopped. Recently, the CommonWealth Magazine has released an article titled, “Red Blockchain Rolling in Taiwan. The most sophisticated hotels in Taipei host roadshows for Chinese ICO virtually every week.” The author said that “crypto market manipulation and the exploitation of individual investors are coming to Taiwan!” This statement has led to heated debates.
The following content is the original news article published by CommonWealth Magazine. Everyone can intuitively feel the bewilderment and vigilance of our compatriots in Taiwan.
“Red Blockchain Rolling in Taiwan. The Most Sophisticated Hotels in Taipei Host Roadshows for Chinese ICOs Virtually Every Week.”
Mainland China has recently intensified its efforts to crack down on initial coin offering (ICO). In mid-August, some crypto-focused media platforms, such as WeChat and Alipay, began to ban transactions related to virtual currency. On August 23 and August 29, respectively, Beijing and Guangzhou announced the ban on crypto-related promotional activities.
Pan Gongsheng, deputy governor of the People’s Bank of China, publicly said that he would try all means to put a stop on ICO and crypto-related exchanges.
Taiwan Has Become a New Paradise For Crypto-Focused Activities.
As mainland China has banned cryptocurrency exchanges and ICO promotions both online and offline, these investors had nowhere to go. As a result of the suppression, they moved their whole set of speculative strategies to Taiwan. A massive complex of interest groups, formed by mainland media and Chinese capital, is currently getting underway to invade Taiwan.
It was the mainland media that first appeared in Taiwan. On August 28, the Chief Operating Officer of a crypto-focused financial media, whose official WeChat social account was closed, performed at the “WHATs NEXT! From 5G internet connectivity to the future of mobile industry” summit. Unsurprisingly, the forum was directed by the National Development and Reform Commission of the People’s Republic of China.
“We will bring our genuine ideas to the market and help cryptocurrency investors find investment opportunities,” the Chief Operating Officer told the Taiwanese government officials and people who attended the forum. It was somewhat unexpected that during this 5G summit, blockchain projects based in mainland China were also presented on stage. The most critical element in ICOs is publicity because the fundraising target of ICOs is always the public. If the ICO lacks marketing campaigns and large-scale advertising, an individual investor is unlikely to invest. This is why Taiwan’s hippest hotels, such as the W Hotel, host campaigns for mainland ICOs almost every week. When asked if he came to Taiwan because the government in mainland China prohibited him from conducting ICOs, the Chief Operating Officer declined to reply.
The Chinese Media Are Coming
Some mainland media companies had made their presence in Taiwan recently.
BlockTimes, an online news platform that provides information about Bitcoin and cryptocurrency, was officially launched on August 26th. Their headquarters is located in the Giraffe Building in Taipei, not too far away from the Shandao Temple. BlockTimes uses written Cantonese as the default language for its official website. Moreover, the official website claims that BlockTimes is the most influential crypto-related media platform in Taiwan.
Behind BlockTimes is the Beijing-based social media portal Block360.Pro. Two people from mainland China work at the company’s office in Taiwan. One of them is Shi Yanqiang, founder of Block360.Pro. The other person is Guo Pan, the head of BlockTimes in Taiwan. They have been busy visiting technology-based media companies and meeting with officials as well as blockchain teams of late.
When media platforms move from mainland China to Taiwan, will they face issues related to Chinese capital? When asked by a reporter from the CommonWealth Magazine about this potential risk, Shi Yanqiang said that “BlockTimes in Taiwan is funded entirely by Taiwanese investors. The company has nothing to do with the Chinese capital.”
The first interview conducted by BlockTimes was an interview with Xu Yuren, a lawmaker from the Nationalist Party of China who is also known as the “crypto congressman.” Although Xu agreed to be interviewed, he said that he is always on guard against Chinese media coming to Taiwan.
“Mainland China has blocked the cryptocurrency media because many media will spice up a blockchain project and make it look profitable. The reality is, however, they are merely trying to exploit individual investors and sell inflated tokens. As a legislator, I must intervene to see if there is suspicion of false advertising. My responsibility is to protect consumers and investors in Taiwan,” Xu said.
Money Flows From Mainland China to Taiwan
Not only has the Chinese media entered Taiwan, capital used for investment has also come to Taiwan.
Manzi Venture Capital, an angel fund founded by the prolific micro-blogger Manzi Xue, manages more than 500 million yuan. As shown on its human resources website, the angel fund had registered a company named Fortune Plus Holdings Ltd. on August 16th. Its business includes equity investment, asset management, investment management, and investment advisory services. BlockTimes also helps the company recruit operations managers, expand its business in Taiwan, and recruit new members by giving away Ethereum tokens when new employees join the company. Shi Yanqiang said that BlockTimes and Manzi Venture Capital do not have a cooperative relationship.
On September 6, Manzi Venture Capital and some capital exchanges from mainland China convened the “Blockchain and Cryptocurrency Forum” at the Grand Hotel Taipei. Moderated by Taiwanese show host and celebrity Wu Zongxian, the event was joined by BlockTimes and other media outlets that are currently blocked in mainland China.
Out of the 23 guests who were invited to the forum, only two were Taiwanese, one being Wu Zongxian and the other being the author of a book on how to get rich overnight by using virtual currencies. Other than these two people, all attendees were from mainland China. There were 111 cooperating media outlets. Unsurprisingly, all of them were crypto-related media outlets based in mainland China.
Will The Exploitation of Individual Investors Happen Again in Taiwan?
These crypto-related media platforms invaded Taiwan after hitting a wall in mainland China. The most worrying thing is that the pattern of manipulation, which was used to rip off individual investors in mainland China, has also been brought to Taiwan.
Luo Jieliang, who works at a Taiwanese crypto-related news site called BlockTempo, analyzed how individual investors in mainland China were being used to good advantage. People, who own a certain kind of technology, when the ICO project is established, obtain the virtual currency free of charge. During the venture round, capital management companies with sufficient funds (such as venture capital start-ups) get involved first and buy coins at a discounted price of roughly one percent of the cost. Next, media companies collaborate with capital management companies to promote ICO projects through a variety of events and forums. In the private equity round, capital management companies sell their coins to investment agents and institutional investors through WeChat and other social media platforms. They usually sell at 10 percent of the cost, quitting the market with a tenfold surge in their net profits.
Individual investors usually join the ICO project during the crowdfunding stage. At this point, investment agents and institutional investors, who have purchased coins during the private equity round, start to sell and dump their coins, causing the price of the cryptocurrency to plummet immediately. One example is the ICO project named “BitBitDuo,” which was heavily promoted in Taiwan. Before BitBitDuo was publicly traded in the market, it gained media attention in both mainland China and Taiwan, attracting some Taiwanese investors.
On August 25, BitBitDuo was officially traded against the major cryptocurrency USDT for the very first time, and the opening price for BitBitDuo was converted into U.S. dollars. Shockingly, the opening price of BitBitDuo dropped from US$0.021 to US$0.0058! On the fourth day, the price had fallen to US$0.00009, which was equivalent to a drop of 99.57 percent in just four days. Eventually, BitBitDuo was able to retain only 0.43 percent of its issue price. Market analysts concluded that this final price equaled the cost price during the venture round. Investors who entered the market after that stage were all swindled and exploited.
BitBitDuo’s website shows an official statement that price fluctuations are common indicators of health exchanges.
Media Companies From Mainland China Are Yet To be Allowed to Enter Taiwan
Zhang Mingbin, executive secretary of the Overseas Chinese and Foreign Investment Commission under the Ministry of Economic Affairs, said that no blockchain-related investment applications from mainland China had been received. Industry insiders pointed out that this is entirely normal, given that the flow of these capital funds is through Bitcoin or Ethereum and will involve neither the new Taiwan dollar nor renminbi.
Crypto-related media outlets are usually paid one bitcoin for posting an article that promotes a certain kind of cryptocurrency. At its highest price, one bitcoin could be the equivalent of NT$200,000 to NT$300,000. These earnings are the primary source of income for most crypto-related media.
Luo Jieliang expressed his concerns. “Because this ICO model is suppressed by the government in mainland China, it is now moving to Taiwan as well as other Southeast Asian countries and is expected to have a heavy impact on local regions’ blockchain ecosystems,” Luo said. “The blockchain industry in Taiwan has a rather high standing in the global community. If ICO projects from mainland China continue to invade Taiwan and deceive investors, they will eventually destroy the reputation of Taiwan’s blockchain industry and Taiwan’s local blockchain teams will be overwhelmed.”
Facing serious concerns over the flood of crypto-related media from mainland China to Taiwan, Shi Yanqiang said that “the development of industry usually goes from chaos to orderliness. BlockTimes will be self-disciplined, do it well, and promote the steady development of the industry towards a more orderly and rational state of affairs.”
Xu Yuren also issued a warning. “There is much money flowing into Taiwan from mainland China. The money comes too quickly that no one cares about technology anymore. Nobody is interested in knowing whether or not ICO teams keep their promises. Everyone only cares about short selling and making a profit,” Xu said. “Mainland China is likely to have even stricter controls over the cryptocurrency market and put more efforts to clean up the market. Hence, the Financial Supervisory Commission and the Ministry of Justice must regulate Taiwan’s blockchain industry. By such means, Taiwan’s blockchain industry will remain safe rather than be destroyed by mainland China’s cryptocurrency craze.”