On Sunday, Chinese crypto investors holders began withdrawing their deposits from centralized cryptocurrency exchanges in an effort to protest what investors say are unfair practices on such platforms following the crash of Sushiswap, a popular decentralized finance token.

The protest was circulated on Chinese microblogging platform Weibo and instant messaging app Wechat on Saturday and Sunday. Some users called it a “revolution.” It is unclear how many people participated or how much cryptocurrency was withdrawn in total.

“Together we will dry down the central exchange!” a Wechat user said under a post for the “Sept. 6 coin revolution.” (Image credit: Colin Wu, Wu Blockchain)

Reserves of Ethereum on several exchanges started falling early on Sunday, but the change was small. Binance’s Ethereum reserves dropped by $62,000 from Sept. 5 to Sept. 6.

Some exchanges blocked Ethereum withdrawals, saying they had to update their systems unexpectedly.

“On Sunday, Okex briefly suspended [Ethereum] withdrawals to allow our developers to implement a small but necessary system upgrade. This was not something that we had foreseen which is why we were not able to post prior notice of the upgrade,” Jay Hao, CEO of cryptocurrency exchange Okex told TechNode.

Why Occupy? Colin Wu, the journalist from Wu Blockchain who broke the news, compared it to the Occupy Wall Street movement of 2011. He told TechNode that the protests didn’t have any specific demands, it is just about “hating the rich.”

Investor grievances with centralized exchanges trace back several months. Centralized exchanges have the power to make money off the investors on their platforms, users argue. Such exchanges can manipulate token prices and sell fake coins, taking advantage of the price fluctuations to make money for themselves while misleading investors on their platforms, they said.

Research in 2019 found that 95% of the trading volume on popular exchanges was fake. In May, Huobi and Okex were among big exchanges to join a “real volume” metric launched by crypto data platform Messari.

The Sushiswap connection: On Saturday, popular decentralized finance (defi) token Sushiswap crashed unexpectedly. The coin had led decentralized exchanges to unforeseen heights.

On Sept. 1, shortly after the Aug. 29 Sushiswap launch, the 24-hour trading volume on Uniswap, a decentralized exchange, surpassed that of Coinbase, the leading centralized US exchange. On the same day, Sushiswap accounted for 77% of Uniswap’s trading volume.

On Saturday, Sushiswap’s price dropped by 70%. Some analysts have attributed the fall to the fact that Sushiswap’s lead developer cashed out on $15 million of funds.

But some investors accused centralized exchanges of deliberately crashing the price of the token. Sushiswap’s popularity as a defi token could be seen as a threat to the centralized model of exchanges like Binance and Huobi.

The Sushiswap crash was a “premeditated murder” of decentralized exchanges, a Weibo user said on Saturday. (Image credit: TechNode/Eliza Gkritsi)

This theory caught on in Chinese social media, with users posting messages conveying their belief that centralized exchanges wanted to kill Sushiswap’s success.

To be continued: While the total amount of cryptocurrency withdrawn from centralized exchanges was small, the movement marks a shift in Chinese crypto investors’ view of centralized exchanges.

Eliza Gkritsi

Eliza is TechNode's community listening reporter at the Shanghai office. She acts as a link between the editorial team and TechNode Squared members. She previously worked as a reporter for WikiTribune...