On March 15, Hong Kong's Securities and Futures Commission (SFC) issued a warning regarding the cryptocurrency exchange MEXC, placing it on its watchlist. Despite lacking licensing from the Securities and Futures Commission and failing to apply for a virtual asset trading platform (VATP) license to operate in Hong Kong, MEXC actively promotes its services to investors in the region. This activity is deemed illegal under Hong Kong's Anti-Money Laundering and Counter-Terrorist Financing Ordinance, as it constitutes the unauthorized provision and promotion of virtual asset services within the jurisdiction.
The SFC cautioned investors against engaging in digital asset trading on unregulated platforms, highlighting the risks associated with potential loss of investment should the platform cease operations. This warning coincided with a similar action taken by the Securities and Exchange Commission, which placed the cryptocurrency exchange Bybit on its own watchlist. Currently, the warning list maintained by regulatory bodies comprises 20 cryptocurrency exchanges. Despite its unlicensed status, MEXC ranks as the world's 11th largest cryptocurrency exchange by trading volume, facilitating transactions totaling over $2.19 billion within a 24-hour period, according to CoinMarketCap data.
Hong Kong's Securities and Futures Commission has a history of cracking down on fraudulent activities within the cryptocurrency space. Notably, the SFC has previously intervened to block fake websites posing as reputable local cryptocurrency exchanges. These actions are aimed at safeguarding investors from falling victim to scams and fraudulent schemes. For instance, the SFC issued a warning on March 4 against multiple suspicious websites impersonating licensed cryptocurrency trading platforms, including OSL Digital Securities and Hash Blockchain Limited (also known as HashKey).
Moreover, MEXC has been the target of impersonation by fraudulent entities. The China Securities Regulatory Commission blacklisted eight domain names impersonating MEXC on February 9. In line with regulatory requirements, cryptocurrency exchanges operating in Hong Kong were required to submit VATP applications by February 29. Unlicensed entities must cease operations within the Special Administrative Region (SAR) by May 31. Additionally, exchanges whose VATP applications are rejected by the SFC are obliged to depart from Hong Kong within three months.
Presently, only two cryptocurrency exchanges in Hong Kong have obtained licensing approval from the Securities and Futures Commission. OSL Exchange secured its license on December 15, 2020, followed by HashKey Exchange on November 9, 2022. These licensed entities adhere to regulatory standards and provide a trusted platform for investors to engage in cryptocurrency trading activities within the region.
