Regulators leave license grace period unchanged as cryptocurrency fraud continues in Hong Kong

Regulatory grace period remains unchanged

Julia Leung, chief executive officer of the Hong Kong Securities and Futures Commission (SFC), said the grace period for the Cryptocurrency Regulation Ordinance will remain as scheduled despite a spate of fraud cases.

Mr. Leung says:

He also reiterated the importance of investor education and the need to be especially cautious when being introduced to projects with high returns.

Wong Lok-yang, head of licensing at SFC, agreed with Leung and said the original intention of introducing the grace period was to ensure that crypto platforms have sufficient time to prepare and apply for the relevant licenses. Says.

The Hong Kong SFC has been implementing new regulations on virtual currencies since June. Virtual currency companies, including existing ones, must apply for licenses by June 2024. However, during the interim transition period, unregistered exchanges will be able to operate as a grace period.

connection: Hong Kong will implement new rules for virtual currency exchanges from June, stipulating stocks that can be listed, etc.

New Hounax scams occur

The background is that Hong Kong has been experiencing a series of scams. In September, a fraud incident occurred at the unregistered virtual currency exchange JPEX. 2,360 cases of damage were confirmed, and the total damage amounted to approximately 28.3 billion yen.

connection: Hong Kong police arrest 8 people for fraud related to unlicensed virtual currency exchange “JPEX”

Following the JPEX incident, the Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) have introduced additional investor protection measures. Cryptocurrency intermediaries are required to disclose risks and test retail investors’ knowledge of cryptocurrencies.

connection: Hong Kong authorities introduce additional restrictions on virtual currency investments following huge scam in September

However, multiple scams have since been discovered. On the 25th of this month, Hong Kong police began an investigation into the virtual currency exchange Hounax. The move comes after more than 130 people alleged they were defrauded of a total of nearly 2.3 billion yen (HK$120 million).

Earlier this month, the Hong Kong SFC had blacklisted Hounax as a suspicious cryptocurrency trading platform for allegedly falsely representing its relationships with financial institutions and venture capital firms.

According to SFC Commercial Crime Director Chan Wai-kei, Hounax scammers pretended to be investment experts and lured people to the cryptocurrency platform with promises of high returns.

However, investors have since been unable to withdraw their funds from the platform.

Additionally, in October, a phishing scam pretending to be from Binance occurred, and 11 people suffered losses totaling more than 66.5 million yen.

connection: Hong Kong police warn of phishing scam impersonating Binance, causing damage worth 66.5 million yen

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