Hong Kong's Securities and Futures Commission (SFC) has announced plans to intensify its crackdown on unregulated cryptocurrency trading platforms operating within the region.
In a statement made on September 25, the SFC revealed its intention to publish a comprehensive list containing details of all licensed, deemed licensed, closed, and pending applications. This list aims to assist the public in identifying potentially unregulated virtual asset trading platforms (VATPs) ) conducting business in Hong Kong.
The SFC also disclosed its intention to maintain a dedicated list of "suspicious VATPs," which will be prominently displayed and easily accessible on its official website.
These actions follow the JPEX cryptocurrency exchange scandal, described by local media as one of the worst-ever cases of financial fraud in the region. JPEX had been accused of marketing its services to Hong Kong residents without obtaining the required license.
During a press conference held on September 25 to discuss the new regulations and the JPEX scandal, Christopher “Kit” Wilson, the SFC's Enforcement Director, explained that the loss of control over JPEX had been due to the "evasive" behavior of stakeholders and unsatisfactory responses to information requests. JPEX had been placed on the alert list in July 2022.
Subsequently, a complex investigation involving multiple parties in various jurisdictions was initiated by the SFC, which escalated in April 2023 following its receipt of the first formal investor complaint. It was only in June 2023, after the full implementation of Anti-Money Laundering Regulations ( AMLO), that a formal fraud investigation was launched.
Wilson stated, "Following an investigation, we issued a formal warning on September 13 and referred the matter to the police." As of now, it is estimated that the financial losses resulting from JPEX have reached approximately $178 million, with over 2,200 complaints lodged by affected exchange users.
Numerous individuals, including cryptocurrency influencers, YouTubers, and employees of alleged fraudulent cryptocurrency exchanges, have been detained for questioning. In response, the SFC emphasized the risks associated with dealing with unregulated VATPs and the necessity for appropriate regulation to maintain market confidence.
Furthermore, the regulator pledged to collaborate with local law enforcement to establish a dedicated channel for citizens to report suspicious VATP activities and potential violations. This collaborative effort aims to enhance the investigation of JPEX-related incidents and facilitate the prosecution of offenders.
