CEO of closed bitcoin exchange defies Beijing regulators

January 11, 2018 08:30
Bitcoin's price is forecast to reach US$100,000 this year and hit US$150,000 in 2021. Photo: Bloomberg

The founder of China’s longest-running bitcoin exchange is confident the cryptocurrency will reach US$100,000 in value this year and that Chinese will continue to buy it, despite fierce opposition from the Beijing government.

Bobby Lee is chief executive of Bitcoin China (, the country’s first bitcoin exchange set up in June 2011, which was closed in September 2017 on the orders of the People’s Bank of China. It was the world’s longest-running bitcoin exchange.

On Jan. 3rd, the People’s Daily denounced the currency as a “front for speculators” that operated outside the regulatory control of governments or regulatory authorities. It compared the currency to the Tulip Bulb Bubble in Holland in the 17th century.

But, speaking on the same day at the Foreign Correspondents Club (FCC), Lee presented a spirited defense of what he called a “digital cryptocurrency”.

“Chinese are crazy about bitcoin because they love speculation, investment and making money,” he said. “My advice to Hong Kong investors is to hold at least one percent of their assets in it, in the interests of diversifying their assets. Hong Kong is better than China, because you have no foreign exchange controls.”

Bitcoin's price has fluctuated widely since it was created in January 2009 by a person called Satoshi Nakamoto, probably a fake name. In June 2011, it started trading at 100 yuan on the Chinese exchange, then fell to 20 yuan, before rising to 7,000 yuan in November 2013 and 28,000 yuan in September 2017 when the exchange was closed. As of the morning of Jan. 4, it was trading at US$15,188.82.

Lee said the price would reach US$100,000 this year and is likely to reach US$150,000 in 2021.

“The reason that it will go up is the inherent failures and limitation of the world’s monetary authorities. There is only a fixed amount that will be issued, 21 million. Currently, there are 16.5 million outstanding, with one-two million being added each year.

“Such a fixed amount is unique, and different to currencies controlled by governments, which can issue more when they wish. Bitcoin is the first system of currency not regulated by governments or companies which can control how you spend it, even if it is, in theory, ‘your own money’,” he said.

“I can transfer it to anyone I want and no-one can stop me. That is why the monetary authorities hate it. Before, they had a monopoly on our assets.”

Ownership is not linked to a name but to a private key with 160 bytes of encryption, compared to six on a bank card. Lee said that this large number made it impossible for someone else to work out the combination.

He said Beijing authorities were suppressing bitcoin. “But the issue is still there and the value has increased substantially since the exchange was closed. Japan, South Korea and the US are ahead of China,” he said.

In 2017, the Financial Services Agency of Japan announced rules that allow people to pay for goods and services with bitcoin and require cryptocurrency exchanges or remittance operators to be licensed and subject to annual audits.

These have given bitcoin official approval. “The Japanese have felt that cryptocurrencies are a scary thing but trading volumes have increased as many now see it as trustworthy thanks to government approval,” said Yusuke Otsuka, chief operating officer at Coincheck, a bitcoin exchange.

Mainstream banks do not like to deal in bitcoin precisely because it is unsupervised by the regulatory authorities under which they work. Because of this, dealers in weapons, drugs and other illegal goods have used bitcoin as their currency to avoid governmental control.

For the same reason, a majority of people are reluctant to buy bitcoins; they understand too little about them and feel they are unsafe. They cannot hold or touch the asset physically.

One American investment banker attending the FCC lunch said the next step would be a major US investment bank setting up a trading desk in cryptocurrencies and asking the Securities and Exchange Commission for regulations to govern it. “I expect the SEC to do so,” he said.

Lee said that after the closure of the exchange, his company was doing other kinds of business, including MOBI and B2B.

For a person openly defying the Chinese government, he was not cowed. “Let me give you the four mistakes in investing in bitcoin – be indecisive and wait to invest, do not buy enough, sell after making a small gain, sell after a panic crash … It is a new asset class and is meant to equal gold.”

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A Hong Kong-based writer, teacher and speaker.