Hong Kong authorities reported that 145 users fell victim to a scam orchestrated by the unlicensed cryptocurrency exchange Hounax. It has resulted in a loss of 148 million HKD ($18.9 million), as reported by the local media outlet Shenzhen Commercial News on November 27. During an initial press conference on November 25, local police informed the public about the reports regarding Hounax.

SFC Identifies Nine Suspicious Crypto Investment Platforms

The Hong Kong Securities Regulatory Commission (SFC) disclosed that, as of yesterday (Monday), they had received 18 complaints about the exchange, in regards to amounts ranging from 12,000 HKD to 10 million HKD. Despite claiming to be a licensed platform in collaboration with legal financial institutions, previously Hounax was listed by the SFC as a suspicious platform, with a warning about the associated risks.

The platform allegedly attracted local customers by falsely asserting it was founded by the original Coinbase technical team, possessed a Canadian license, and was exploring investments from entities like Sequoia Capital and IDG Capital.

Chief Inspector Ke Yongn of the Commercial Crime Investigation Section of the Hong Kong Police stated that Hounax also used social media to lure in its victims. However, the official Facebook page of the platform is reportedly no longer online. The SFC has identified nine suspicious crypto investment platforms, including Hounax, JPEX, Hong Kong Digital Research Institute, BitCuped, FUBT, futubit/futu-pro, EFSPD, OSL trading, and arrano.network.

This incident followed a major scandal involving the JPEX exchange in Hong Kong earlier this year when over 2,000 complaints were received, resulting in approximately $180 million in losses. So far, 66 individuals have been arrested in connection to the JPEX scandal. These events have prompted local regulators in Hong Kong to enhance crypto regulation to prevent further industry catastrophes. However, regulators have affirmed that the country's one-year grace period for crypto exchanges will remain unchanged.

🇭🇰 Hounax Exchange Scam Shakes Hong Kong: Investors Demand Justice 🇭🇰

Hong Kong has been rattled by another cryptocurrency exchange scandal, this time involving Hounax, leaving investors counting their losses and demanding justice.https://t.co/4AYg24jkJL pic.twitter.com/h4CZsCTsOW

— Blockhead (@blockhead_co) November 28, 2023

Joint Working Group Formed for Hong Kong's Crypto Sector

Finance Magnates reported that in a joint effort to enhance vigilance and enforcement against illegal activities within Virtual Asset Trading Platforms (VATPs), the SFC has established a working group in collaboration with the Hong Kong Police Force (HKPF).

Following a high-level meeting on September 28, 2023, the working group comprised representatives from the HKPF's Commercial Crime Bureau, Cyber Security and Technology Crime Bureau, Financial Intelligence and Investigations Bureau, as well as the SFC's Enforcement Division and Intermediaries Division. This partnership aims to enhance vigilance and enforcement in the virtual asset trading sector.

The key objectives of the working group include facilitating information sharing related to suspicious activities and breaches associated with VATPs, implementing a mechanism for risk assessment, and improving coordination in investigations linked to virtual asset trading platforms.

Eve Chung, the Assistant Commissioner of Police, highlighted the significance of this collaboration in responding to challenges arising from VATPs to better protect the general public of Hong Kong. This partnership signifies a step forward in combating illicit activities in the virtual asset trading sector.