Our weekly roundup of news from East Asia curates the industry’s most important developments.
Yet another crypto scandal in Hong Kong
Scammers posing as investment experts allegedly enticed 145 victims to tip $18.9 million into the unlicensed Hong Kong crypto exchange Hounax.
According to reports earlier this week, the police said investors were allegedly promised up to 40% return per annum with “no risk” in its advertisements. After users deposited their funds, they were unable to withdraw them. On Nov. 1, the Securities & Futures Exchange (SFC) of Hong Kong listed Hounax on its billboard of suspicious crypto exchanges but clarified that because Hounax was unlicensed at the time of the incident, it was not subjected to the regulator’s enforcement actions.
This was the second scandal involving a crypto exchange in Hong Kong in recent months. In September, another unlicensed exchange, JPEX collapsed after allegations of a Ponzi scheme unsurfaced, leading to 66 arrests and an estimated $205 million in investors’ losses.
Despite the scandals, Hong Kong regulators appear to remain steadfast in their commitment to transforming the city into a major Web3 hub. On Nov. 27, SFC CEO Julia Leung explained that “even if the grace period ends tomorrow, fraud will still occur, so there is no intention to modify the grace period and other measures for the time being.”
Under current regulations, a grace period for crypto exchanges to operate without registration will end in June 2024. On Nov. 30, the SFC stated that it seeks to legitimize initial coin offerings in the city to create more revenue for the national budget.
A former ad from the defunct Hounax exchange. (Medium)
In other Hong Kong crypto news, the financial institutions Interactive Brokers and Victory Securities this week announced they had secured crypto licenses, with the former partnering with licensed crypto exchange OSL to immediately provide Bitcoin and Ethereum trading services to its Hong Kong…