Hong Kong’s Securities and Futures Commission has announced that it will publish a list of crypto trading platforms that pose a security risk.
The Securities and Futures Commission (SFC), one of Hong Kong’s primary financial regulators, has pledged to intensify efforts to combat unregulated cryptocurrency trading platforms within its jurisdiction.
The SFC announced on September 25 that it will publish a list of all licensed, presumed licensed, closing down, and application-pending virtual asset trading platforms (VATPs) to assist the public in identifying potentially unregulated VATPs conducting business in Hong Kong.
The SFC stated that it will also maintain an inventory of “suspicious VATPs,” accessible and prominently displayed on the regulators’ website.
The new rules come immediately in the wake of the ongoing JPEX crypto exchange scandal, an affair that local media outlets are describing as one of the worst cases of financial fraud ever to strike the region. JPEX is accused of marketing its services to Hong Kong residents without obtaining a license.
Christopher “Kit” Wilson, director of enforcement at the SFC, stated at a press briefing on the new rules and the JPEX scandal on September 25 that JPEX was placed on the alert list in July 2022 due to “evasive” behavior from stakeholders and inadequate responses to requests for information.
Wilson disclosed that the SFC subsequently initiated a complex investigation involving multiple parties across various jurisdictions, which escalated in April 2023 after the organization received its first official investor complaint.
“In June 2023, an AMLO (Anti-Money Laundering Ordinance) came into full effect. At that time enforcement commenced a more formal fraud investigation. As a result of that investigation we issued a formal warning on Sept. 13 and referred the matter to the police.”
At the time of publication, it was estimated that the financial impact of JPEX had reached approximately $178 million, with local police receiving over 2,200 complaints from affected users of the exchange.
Eleven individuals have been detained for questioning, including crypto influencers, YouTubers, and employees of the allegedly fraudulent cryptocurrency exchange. The SFC stated in a statement that the aftermath of JPEX:
“highlights the risks of dealing with unregulated VATPs and the need for proper regulation to maintain market confidence.”
The regulators added that they would collaborate with local police to establish a dedicated channel for citizens to report suspicious activity and potential legal violations by VATPs and conduct a more thorough investigation of the JPEX incident to “bring the wrong-doers to justice.”
