Hong Kong Eyes Stronger Crypto Regulations: Unlicensed Exchanges Under Threat

• Hong Kong Authority Considers Enhanced Regulatory Powers Over Unlicensed Crypto Exchanges
• Hounax Fraud Case: The Details
• The Role of the Securities and Futures Commission (SFC)
• Post Hounax Incident: Actions Taken by the SFC

Hong Kong Authority Considers Enhanced Regulatory Powers Over Unlicensed Crypto Exchanges

In light of recent fraudulent activities in the crypto market, Hong Kong's Chief Executive, John Lee, has voiced readiness to extend stronger regulatory powers to tackle unlicensed cryptocurrency exchanges. This statement was made in response to an investigation into a virtual asset trading platform, Hounax, accused of scamming individuals out of millions of dollars.

Hounax Fraud Case: The Details

As of Monday, there were reports of 145 people claiming they had been defrauded a total of HK$148 million ($19 million) by Hounax. This information was provided by the South China Morning Post.

Lee pointed out the necessity of government supervision to safeguard investors and effectively deal with unlicensed platforms. This is not the first case of this nature as a similar incident involving JPEX, a crypto exchange, led to the arrest of six individuals following over a thousand complaints amounting to $128 million.

The Role of the Securities and Futures Commission (SFC)

The SFC disclosed that JPEX had been operating without a license, prompting Lee to argue for stricter licensing laws. The South China Morning Post reported that the SFC does not have the power to shut down unlicensed crypto exchanges.

Post Hounax Incident: Actions Taken by the SFC

In the aftermath of the Hounax incident, the SFC released a list of licensed virtual asset trading platforms to guide investors on safe crypto platforms to use. Hounax had been placed on the SFC's alert list on November 1. However, local lawmaker, Doreen Kong, opined that the authorities should have done more to prevent the platform from reaching the public and causing more damage.

Criticizing the SFC's approach, Kong stated, How can they just rely on an alert list and say they have issued a message to the public? It's like telling people that it's every man for himself.

Edited by Jonathan Stoker