Another virtual currency platform worth over 100 million yuan crashes in Hong Kong

Another shocking virtual currency platform crash occurred in Hong Kong, and investors found that they could not withdraw their investment on HOUNAX. This is the second time that Hong Kong investors have re-examined the risks of the cryptocurrency market, following the virtual asset trading platform JPEX crash two months ago, which implicated many Hong Kong artists and social media influencers such as Julian Cheung and Chong Simin.

It is worth noting that the Hong Kong Securities and Futures Commission had already added HOUNAX to the list of suspicious virtual asset platforms on its official website as early as November 1. In October, after the JPEX explosion, the Hong Kong Securities and Futures Commission had established a special working group with the Police Force, hoping to strengthen cooperation in monitoring and investigating illegal activities related to virtual asset trading platforms.

Hong Kong police introduce the situation of the explosive platform

In order to provide more information to the public, the Hong Kong police held a press conference on the afternoon of November 25 to inform the public about the situation of the virtual asset platform.

Intelligence and Support Superintendent Chan Wai-kei of the Commercial Crime Bureau said that the police recently discovered that some scammers posed as investment experts and attracted citizens to invest through a virtual asset trading platform called HOUNAX, promising high returns. However, these investors eventually found that they could not get back their investment funds. It is said that the platform has involved 131 victims, with the amount involved exceeding 110 million yuan. The amount of fraud in each case ranged from 120,000 yuan to 4 million yuan, and the highest single loss was about 4 million yuan.

Chen Weiji pointed out that HOUNAX started operating at the beginning of this year. Its website is in traditional Chinese and the login page presets the Hong Kong area code "+852", indicating that it is targeting Hong Kong citizens for fraud. At present, the website address is still valid and citizens can even continue to download the platform's mobile application. The police have issued a notice to the telecommunications company, requesting the blocking of the webpage, and will continue to investigate and do not rule out the possibility of taking further action.

Chief Inspector of the Commercial Crime Bureau, Ko Wing-yan, said that these scammers first contacted the victims through various social media, claiming to be investment experts, and invited them to join investment groups to share investment information and provide analysis and advice on stock and virtual asset investments. When the victim expressed interest in investing, the scammer would send a link and ask the victim to download a fake investment application, guide the victim to open an account and deposit funds into a designated third-party account, and then recharge. In order to win the trust of the victim, the scammer would show a fake account fund growth, but in fact these figures were meaningless, and the victim's funds were transferred from the beginning. When the victim asked to retrieve the funds, the scammer would refuse or ask the victim to pay a handling fee ranging from 20% to 80% as a redemption fee under various excuses. Even if the victim paid the fee, he would not be able to get his funds back in the end, and the so-called customer service and experts would disappear. Eventually, the victim might be kicked out of the communication group and could no longer contact the scammer.

Ke Yongen said that in the cases the police came across, the victims had never seen the true faces of the scammers, and the accounts used to collect the funds involved were all fake accounts, which increased the difficulty of the police investigation.

The China Securities Regulatory Commission has included 9 platforms in the suspicious list

On the same day as the police press conference, the official account of the Hong Kong Securities and Futures Commission also issued a statement stating that the HOUNAX virtual asset trading platform has been included in the Securities and Futures Commission's special list of suspicious virtual asset trading platforms since November 1, 2023. Investors should refer to the Securities and Futures Commission's list of licensed platforms before trading to verify whether the relevant platform has been licensed, and beware of the possible risks of buying and selling virtual assets on unregulated trading platforms.

Before being added to the blacklist by the Securities and Futures Commission, the cryptocurrency platform HOUNAX actively recruited customers in Hong Kong, claiming that it was co-founded by the original Coinbase technical team and had obtained a Canadian MSB license. It also claimed to have received investments from well-known venture capital firms such as Sequoia Capital and IDG Capital.

The list of “unlicensed and suspicious virtual asset trading platforms” on the official website of the Securities and Futures Commission mainly lists companies that “have not obtained a license in Hong Kong” but target Hong Kong investors for marketing. There are currently 9 companies including HOUNAX, JPEX, Hong Kong Digital Research Institute, BitCuped, FUBT, futubit, and futupro.

The CSRC also stated that since some suspicious companies or websites are often discovered, new names will be added to the list from time to time. If investors have ever come into contact with unlicensed companies, please file an official complaint through the CSRC.

Virtual currency regulation still faces challenges in Hong Kong

Although there are constant explosions of virtual asset platforms, if there is one word that can summarize the development of the Hong Kong cryptocurrency market in 2023, it is undoubtedly "compliance". Due to the high compliance costs, there are only two licensed virtual asset trading platforms in Hong Kong so far.

In the Hong Kong cryptocurrency market, OSL, which was the first to obtain a SFC license, has reported a change of ownership. According to OSL's official website, the parent company BC Technology Group received a strategic investment of approximately HK$710 million from BGX Group and will issue 187.6 million new shares to BGX, equivalent to approximately 42.79% of the existing share capital; East Harvest, the current major shareholder of BC Technology, will dilute its shareholding from 42.77% to 29.96%, while BGX will hold 29.97% in the future. After the completion of this strategic investment, BGX will become the largest shareholder of OSL.

As soon as the news came out, the share price of BC Technology Group rose, and the total market value once exceeded HK$2.1 billion.

In the US market, Binance, the world's largest cryptocurrency exchange, and its CEO Zhao Changpeng recently reached an agreement with the US Department of Justice to plead guilty to charges of money laundering. Binance agreed to pay a fine of more than $4.3 billion to the US authorities, and Zhao Changpeng will resign as CEO and pay a personal fine of $50 million.

Under multiple shocks, the price of Bitcoin hit a new high since May 2022, and re-entered $38,000 on Friday, with a cumulative increase of 3.5% in a week. At the same time, Ethereum, the world's second largest cryptocurrency by market value, has returned to above the key psychological level of $2,000, and has risen 2% to $2,101.78. Ethereum has risen by more than 8% this week.

Binance and OSL represent the latest trends in the cryptocurrency circles in the United States and Hong Kong. The rapid development of the digital asset market in Hong Kong has attracted more and more institutional and individual investors to pay attention to and participate in it. However, it must be admitted that virtual currency regulation in Hong Kong still faces challenges, including uncertainty in the regulatory environment and potential security risks.