After an outright ban on cryptocurrency mining in May, the Chinese government began one of the most stringent crypto crackdown tactics in September. Any crypto-related transactions were declared unlawful under the September cryptocurrency crackdown policy, and centralized international cryptocurrency exchanges were barred from operating in mainland China. The restriction on international crypto exchanges resulted in an increase in anonymous wallets and the use of Defi and Dex.
As DEX platforms have grown in prominence, so has the number of frauds related to them. According to a recent post on Twitter by Wu Blockchain, a notable Chinese insider, the frequency of scams using bogus metamask wallets increases. Thousands of investors have lost a large portion of their money due to these false wallet frauds.
“As centralized exchanges ban Chinese users, some users seek decentralized wallets. As a result, a large number of scammers forged fake metamask wallets for fraud, resulting in losses for many Chinese investor,” the article stated.
Following the Chinese crypto prohibition, traffic on several DEX platforms soared, and insiders observed a rise in Chinese investors’ curiosity in learning more about Defi.
China will keep cracking down on cryptocurrency.
Because digital currency’s decentralized structure makes it almost hard to prohibit, governments that perceive it as a threat to their monetary policy often restrict bitcoin exchanges and platforms. However, the crypto ecosystem has developed substantially in the Dex and Defi business, which is now a multi-billion dollar industry. Defi provides all financial services with the extra benefit of anonymity, making it a popular alternative.
Dydx, a lesser DEX protocol, set daily trade volume records and outperformed larger DEX platforms like Sushiswap by a large margin. The flood of new Chinese merchants, according to many, aided the trading volume.