China's Crackdown Spurs Massive Onchain Transfers, Cold Wallets Move $3 Billion in Bitcoin and 800K Ether

Following the latest statements from China’s central bank concerning cryptocurrencies and offshore crypto exchanges, massive amounts of funds have been moving onchain. On September 26, at approximately 1:00 a.m. (UTC) 72,999 BTC or $3.1 billion in bitcoin was dispersed to unknown wallets.

Huobi to Gradually Retire Mainland China Users, 800K Ether Move from Huobi to an Unknown Wallet

Word around the crypto campfire is that offshore exchanges near China are seeing massive amounts of crypto transfers during the last few days. For instance, theblockcrypto.com writer Wolfie Zhao revealed on September 25 that the Chinese government’s crackdown has “spooked some retail users” and the action had spilled over to over-the-counter (OTC) markets.

Zhao’s report shows a screenshot of “OTC merchant quotes for USDT against Chinese yuan on Huobi.” Following Zhao’s report, Huobi detailed to users on Sunday that the crypto exchange would “gradually retire existing mainland China users.”

Meanwhile, a lot of money has been moved onchain and some of the crypto wallets have been flagged as allegedly belonging to Huobi. For instance, on September 26, approximately 800,000 ether worth $2.4 billion was “transferred from Huobi to [an] unknown wallet[s],” Whale Alert’s Telegram channel detailed on Sunday.

The massive ether transfers were sent in 100K ETH transactions. There’s a number of transfers of a few thousand ETH from Huobi to unknown wallets as well.

$3.1 Billion in Bitcoin Dispersed, One Wallet Flagged as a Possible Huobi Cold Storage

Onchain action from the Bitcoin (BTC) network saw at least 72,999 BTC or $3.1 billion in bitcoin transferred on September 26. The bitcoin movements stemmed from two large wallets and one of them is classified as possibly being Huobi’s cold storage wallet. While the count caught by the onchain parsers showed 72,999 BTC, a third parser indicates that the total amount received by the wallet “1Njh,” at least at the time of writing, is 104,999 BTC in total.

Records from oxt.me indicate that at least one of the two BTC addresses, was flagged twice as a possible Huobi cold storage wallet. Moreover, the movement was discovered by the parser software developed by btcparser.com and the Telegram research group Gold Found In Sand.

​​”Today our second parser noticed an interesting transfer for an impressive 72,999 bitcoin,” a member of the onchain research group Gold Found In Sand told Bitcoin.com News. “Don’t panic. This is the Huobi exchange moving its funds. But what happens next is not yet entirely clear. Funds from the ‘1Njh’ wallet began to be withdrawn in transactions of 2,000 BTC and each has one recipient of approximately 1,800 BTC and the rest of the funds are distributed between different small wallets.” The Gold Found In Sand member further added:

Perhaps this is a new mechanism for distributing funds. What if (come on) this is a preventive reaction of the exchange to the next sneeze of their government? In any case, our parsers continue to monitor the situation. And all this movement with the transfer of funds is clearly visible from the bird’s eye view of the third parser.

Curious Methods of Transfer

The researcher noted that the team has an idea that it could be somehow coupled to the recent announcement stemming from the Chinese government.

“Yes,” the Gold Found In Sand researcher remarked. “We know the [Chinese] government made a lot of similar announcements in the past. And such a movement happened only today. Which is strange.” What was most peculiar of it all was the movement and how the transfers were arranged the researcher highlighted.

“What we found strange was that the money that went out in transactions of 2,000 BTC, but also inside those 2,000, there is one address receiving almost 1,800+ bitcoin, and a dozen smaller ones… And those smaller ones, we are curious about them. Could that be withdrawals of current Chinese clients? Well, it’s just an idea, we don’t know the truth yet,” the researcher concluded.