Hong Kong Chief Executive speaks out on virtual currency exchange Hounax scam

“Government regulation is important”

Hong Kong Special Administrative Region Chief Executive John Lee made a statement on the 28th regarding the fraud incident involving the crypto asset (virtual currency) exchange Hounax.

Mr Lee said government regulation will be important to protect investors’ interests and combat unlicensed platforms. It also goes on to say that the government will actively cooperate with regulators when necessary.

Hong Kong is currently tightening regulations after the JPEX fraud incident in September. Cryptocurrency intermediaries are required to disclose risks and confirm whether individual investors have knowledge of cryptocurrencies when making investments.

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Lee once again cautioned that investors should use platforms that have been approved by the authorities. The Hong Kong Securities and Futures Commission (SFC) had blacklisted Hounax as a suspicious crypto trading platform since the beginning of this month, before the fraud was discovered.

Currently, nine questionable crypto investment platforms are listed on the SFC’s homepage. In addition to HOUNAX and JPEX, others include Hong Kong Digital Research Institute and BitCuped.

Since September, in order to protect investors, the SFC has made a list of licensed virtual currency trading platforms, platforms applying for licenses, and closed platforms publicly available for consumers to check.

Julia Leung, CEO of the Hong Kong Securities and Futures Commission (SFC), said Hong Kong’s commitment to promoting Web3 remains unchanged.

The series of fraud cases has made us aware of the importance of regulation, and he says that virtual currency trading forms an important part of the Web3 ecosystem. He also commented that the technology used in digital finance and cryptocurrency activities could benefit financial markets.

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Overview of the HOUNAX incident

As of the 27th, a total of 145 victims have been reported in the HOUNAX incident, and the total amount of damage has reached approximately 2.8 billion yen (approximately HK$148 million).

Hong Kong police held a press conference on the 25th to provide an overview of the HOUNAX incident.

According to the Hong Kong Police, HOUNAX’s scam method is to first lure victims through social media such as Facebook, and once the victims begin to show interest in investing, they solicit them by sending them a link to the HOUNAX platform on their mobile phones. do.

Next, HOUNAX displays an increasing amount of revenue on the account screen that the victim views on the app. However, in reality, the funds deposited by the victims have been stolen and cannot be withdrawn even if they try to withdraw them.

It was also notable that there were no cases in which the victim saw the true face of the scammer. The account to which the funds were transferred was also fake, making the police investigation more difficult.

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