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Hong Kong SFC Updates Alert List to Include 39 Crypto Platforms
Recently, the Hong Kong Securities and Futures Commission (SFC) has once again exposed a batch of suspicious virtual asset trading platforms, issuing a public warning. This sends a clear signal: the Hong Kong government is closely monitoring the latest developments in the cryptocurrency sector and is taking strict actions against illegal financial activities to ensure market fairness and transparency.
Since 2021, the SFC has disclosed a total of 39 suspicious platforms related to the crypto market, including exchanges like MEXC and Bybit. What defines a suspicious virtual asset trading platform according to the SFC, and why have these platforms been warned?
What are “suspicious” virtual asset trading platforms?
Bitrace categorizes the SFC’s disclosed suspicious platforms into three types: platforms created to conduct fraudulent activities, platforms with legitimate businesses but involved in some fraudulent activities, and platforms with legitimate businesses that operate without a license.
Source from Bitrace
- Platforms Created for Fraudulent Activities: These platforms are warned by the SFC for impersonating official exchanges and fabricating false business information to lure investments. For example, a fraudulent platform impersonating MEXC claims to be a legitimate virtual asset trading platform and is suspected of operating a fraudulent website as depicted. Victims are asked to deposit funds into designated bank accounts for investment purposes but face difficulties when attempting to withdraw funds.
Such websites have frequently appeared in investment scams involving “forex investment” and “cryptocurrency quantitative investment,” causing significant financial losses to overseas Chinese, foreigners, and local non-professional investors. - Platforms with Some Fraudulent Business Activities: A typical example is JPEX. Last year, the SFC noted that the cryptocurrency exchange JPEX claimed it had received investment from a listed company in Hong Kong and purported to have a license for operating a virtual asset trading platform, which was suspected of false advertising. JPEX then restricted user withdrawals with high fees the following day. Moreover, the exchange offered extremely high returns on some products, but investors complained about being unable to withdraw virtual assets or about alterations to their account balances, leading to a rapid collapse of the platform.
These institutions are not solely used for fraud but usually have normal main businesses. However, they may intentionally or unintentionally violate legal boundaries during some business activities. - Platforms with Legitimate Business but No License: According to information disclosed on the SFC’s official website, official exchanges like MEXC and Bybit have been conducting business targeting Hong Kong investors without any SFC license, hence they were added to the SFC’s warning list (numbers 20 and 21).
While this does not imply that the related trading platforms’ operations in other regions are non-compliant, it still causes reputational damage to the brands, highlighting that compliance is the foundation of operation for centralized trading platforms.
Are Hong Kong’s Regulatory Policies Effective?
Bitrace has been closely monitoring the virtual asset trading market in Hong Kong. According to the financial risk audits of the local VAOTC (Virtual Asset Over-The-Counter) group’s business addresses, the scale of cryptocurrency funds (USDT) associated with fraudulent activities entering Hong Kong’s secondary market through OTC channels has significantly decreased after the first quarter of 2024, with current monthly funds halved from the peak.
This decrease may be due to the Hong Kong government’s proposal on February 8, 2024, to establish a licensing system for virtual currency OTC trading platforms (VAOTC), requiring all VAOTCs to apply for a license from customs, which has squeezed out some risk funds. This indicates that local regulatory intervention has promoted the maturity of the Hong Kong cryptocurrency market.
In Conclusion
The Hong Kong Securities and Futures Commission is gradually building a compliant cryptocurrency regulatory environment, providing safety assurances for investors and steering the industry towards a more mature and standardized direction. For local businesses aspiring to operate compliantly, this also presents an excellent opportunity to establish brand trust and a business safety moat.
The post fist appeared on 蜂巢Tech
