Hong Kong Crypto Exchanges Face Major Scams Amid Licensing Process

By: Eva Baxter

Recent investigations in Hong Kong have revealed suspicions of scams involving two cryptocurrency trading platforms, Hounax and JPEX, with reported losses totalling up to $198.4 million. The Hong Kong authorities started investigating Hounax after numerous complaints alleging difficulties in fund withdrawals. A victim of the Hounax scam stated that the scammers gained the trust of users by offering financial advice through social media platforms owned by Meta.

In a parallel development, amidst these investigations, the Hong Kong-based cryptocurrency exchange HKVAEX clarified that they have not applied for a license with the Securities and Futures Commission (SFC) of Hong Kong, contradicting recent reports. The representative informed that the exchange is still preparing for the application. Despite the prevailing concerns, the grace period for cryptocurrency exchanges operating in Hong Kong will reportedly remain in place, according to Julia Leung, Hong Kong's Under Secretary for Financial Services and the Treasury, even amidst these recent scandals.

These incidents underscore the need for stricter regulation in the cryptocurrency sector amidst the rising numbers of such fraudulent schemes that take advantage of regulatory loopholes. Hong Kong lawmakers have criticized the SFC for not taking a proactive role in identifying such risks.