OKCoin and Huobi are accused of using user funds to participate in high-yield investment projects

Two of the largest crypto-currency exchanges in China, OKCoin and Huobi, allegedly used customer funds, directing them to so-called high-yield investment projects (HYIPs). This is written by the publication Quartz with reference to the information agency of the government of the People's Republic of China "Xinhua."

The fact that OKCoin and Huobi could misuse the funds of investors became known during the investigation of the leading exchanges of the country, initiated earlier this year by the People's Bank of China.

It is alleged that these exchanges collectively invested about 1 billion yuan ($ 150 million), "borrowed" from inactive customer accounts, into shadow wealth management products (Wealth Management Products), which in practice often turn out to be high-risk investment projects (HYIPs). The latter offer users unusually high interest on deposits and, as a rule, after several payment cycles are closed without any warning.

The initial statement of the Xinhua News Agency appeared on August 17, and an additional comment was published on August 21. It says that regulators should respond in a timely manner to the emergence of new phenomena, and also calls on the government to pursue a tough policy towards dubious exchanges until their complete closure.

Additional details about which products OKCoin and Huobi could invest in are not included in the agency's message.

The management of OKCoin, however, categorically denies such statements.

"OKCoin adheres to a strict policy of placing inactive funds of customers in low-risk banking products. This policy is consistent with the general practice in the finance and securities industry and aims to protect clients' funds and ensure proper financial reporting and sharing of funds. All other statements we deny as having no justification, "- said OKCoin CEO Star Xu in a comment Quartz.
In addition, the exchange circulated an official statement, in which it categorically denied the charges brought against it.

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Comments from representatives of Huobi at the moment was not received.

Recall, on the eve of both exchanges announced the beginning of Bitcoin Cash support.