Million

Force

Hong Kong’s Securities and Futures Commission (SFC) has taken decisive <a href="https://www.scmp.com/" target="_blank" rel="noopener nofollow">action</a> against what it suspects to be a fraudulent crypto asset trading platform. The SFC <a href="https://www.sfc.hk/en/alert-list/suspicious-virtual-asset-trading-platforms" target="_blank" rel="noopener nofollow">flagged</a> the company at the center of these allegations, Hounax, earlier this month, marking a crucial step in the city’s ongoing efforts to combat crypto-related scams. 
The case gained further momentum as the Hong Kong Police Force initiated an investigation following reports from numerous individuals who claimed significant financial losses. 
News outlet, The South China Morning Post highlighted that the police, having received complaints from 131 victims, are now actively probing the alleged <a href="https://bitcoinist.com/jpex-scandal-cant-ruin-hong-kongs-web3-vision/" target="_blank" rel="noopener ">scam</a> that purportedly swindled investors out of HK$120 million ($15.4 million). 
<h2 id="hounax-s-dubious-operations-and-regulatory-oversight">Hounax’s Dubious Operations And Regulatory Oversight</h2> 
The victims of this alleged scam, as reported, range broadly in age, from young adults to senior citizens, illustrating the wide-reaching impact of such fraudulent schemes. 
One of the most notable cases involves a retired woman, aged 69, who reportedly incurred a loss of roughly HK$12 million. Chan Wai-kei, superintendent of the Commercial Crime Bureau, shared insights into the modus operandi of the scam. 
According to Chan, the perpetrators enticed individuals to invest in cryptocurrencies via the Hounax platform. However, when these investors attempted to withdraw their funds, they found themselves “unable to do so,” signaling the hallmarks of a classic investment scam. 
Hounax’s operations raised red flags for the SFC, prompting its inclusion on the dubious virtual asset trading platform list. The regulatory body’s website statement <a href="https://www.sfc.hk/en/alert-list/2957" target="_blank" rel="noopener nofollow">indicates</a> that Hounax falsely claimed business associations with a financial institution and a venture capital firm. 
Additionally, the platform’s targeting of <a href="https://bitcoinist.com/hong-kong-listed-bitcoin-ether-100-million/" target="_blank" rel="noopener ">Hong Kong investors</a> was evident through its pre-populated +852 field on the user log-in page and its dedicated ‘Hounax Hong Kong’ social media channels. 
This incident has prompted calls for more proactive regulatory measures. In a recent <a href="https://news.now.com/home/local/player?newsId=540653" target="_blank" rel="noopener nofollow">interview</a>, Hong Kong lawmaker Johnny Ng&nbsp;emphasized the need for the SFC to engage more actively with unlicensed crypto trading platforms. 
According to the Hong Kong lawmaker, the SFC can significantly mitigate risks and protect investors by identifying and addressing potential issues early on. 
<h2 id="hong-kong-tightens-crypto-regulations">Hong Kong Tightens Crypto Regulations</h2> 
Hong Kong’s response to the Hounax scandal is part of a <a href="https://bitcoinist.com/is-china-monitoring-bitcoin-etf-via-hong-kong/" target="_blank" rel="noopener ">broader initiative</a> to strengthen regulatory oversight in the crypto sector. In recent months, the Hong Kong Monetary Authority (HKMA) has taken steps to ensure compliance among crypto firms operating in the region. 
In September, the <a href="https://bitcoinist.com/crypto-firms-prohibited-from-identifying-as-banks/" target="_blank" rel="noopener ">HKMA issued stern warnings to companies</a> in the crypto space, explicitly instructing them to avoid using the term “bank” in their business operations unless they are officially recognized as authorized institutions. 
In October, the SFC took further action to bolster its regulatory framework. In a collaborative effort with the police, the regulator <a href="https://bitcoinist.com/hong-kong-police-forms-new-work-group/" target="_blank" rel="noopener ">established a dedicated group</a> tasked with monitoring and conducting investigations into crimes associated with crypto exchanges. 
<img loading="lazy" decoding="async" class="size-medium" src="https://www.tradingview.com/x/JgeuqZ1D/" alt="The global crypto market cap value on TradingView" width="2770" height="1496"> 
Featured image from Unsplash, Chart from Tradingview

Hounax Scandal: Hong Kong Police Probe $15 Million Crypto Fraud, Investors In Turmoil

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