China breakdown on exchanges has begun before the ICO rage. Top exchanges did ho...

peoplewindow · on Sept 20, 2017

There's also the rumour that the exchanges are fractional reserve to a huge extent. I suspect that plays a role.

vkou · on Sept 20, 2017

Exchanges can't operate on a fractional reserve principle. Fractional reserve works for banks because:

Cash on hand + Money people owe the bank >= Cash bank owes its customers.

If an exchange is operating in such a manner, this means that:

Cash + BTC on hand < Cash + BTC exchange owes its customers.

We don't call that a fractional reserve. We call it insolvency (And knowingly accepting new deposits in such an exchange is called 'Fraud.')

Animats · on Sept 20, 2017

Well, we're going to find out very soon. As the Bitcoin exchanges in China shut down, they're going to have to pay back all their customers. "Platforms should also tell the government by Wednesday Sept. 20 how they will allow users to make withdrawals in a risk-free manner and handle funds to ensure that investors' interests are protected."[1]

The executives of the exchanges were told not to try to leave China. Somebody foresaw this problem.

[1] http://fortune.com/2017/09/15/china-shutting-down-beijing-bi...