Shares of Xunlei Ltd. plunged 28 percent after the National Internet Finance Association of China (NIFA) named and shamed Xunlei's LinkToken as an example of an ICO in "disguise."
NIFA is a national self-regulatory organization. Although it is not a government agency, NIFA was initiated in 2015 by the People's Bank of China and approved by the State Council. In its latest communication, NIFA also announced a new warning, saying that its members shouldn't be conducting any ICO-related activities or cryptocurrency trading as the country's central bank has declared all ICOs are illegal and asked all related fundraising activity to be halted in China.
The statement explicitly criticized LinkToken, a token-based virtual currency introduced by Xunlei (Nasdaq: XNET).
"Xunlei has been promoting its LinkToken through frequent investment conferences and circulating so called 'trading tutorial' to attract innocent investors to buy the token," the statement said. "All kinds of virtual currencies are deemed illegal and Xunlei's coin is an example of an ICO in disguise."
NIFA also named YFcloud's LLToken and Baofeng Group's BFC token in the statement.
The clampdown on cryptocurrencies in China continued to gather pace this week. The NIFA warning came at the same time Chinese authorities ordered the closing of all cryptocurrency mining operations in China, citing reasons such as wasting valuable resources and encouraging the speculative cryptocurrency. While Beijing has not issued any official edict on the bitcoin mines, two Chinese miners told Reuters that local authorities had grown more unwilling to allow expansion and had started to shut down some mines in late 2017.
Xunlei had previously been accused by a disenchanted business partner of offering an illegal cryptocurrency. Xunlei vehemently denied the allegations. Yet in response, the company announced that it would change the name of its coin from Wanke Coin to LinkToken, suggesting the new cryptocurrency had nothing to do with coin or currency.
The company saw a fivefold increase in share price since its annoucement of Wanke Coin in October. Xunlei closed at $16.63 per share, down $6.27.
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