The Securities and Futures Commission (SFC) in Hong Kong has announced its plans to increase efforts in combating unregulated cryptocurrency trading platforms within its jurisdiction. The move comes in the wake of the recent JPEX crypto exchange scandal, which has been described as one of the worst cases of financial fraud in the region.
In its announcement, the SFC stated that it would publish a list of all licensed, deemed licensed, closing down, and application-pending virtual asset trading platforms (VATPs). This list aims to help members of the public identify potentially unregulated VATPs operating in Hong Kong. Additionally, the SFC will maintain a dedicated list of “suspicious VATPs” on its website, making it easily accessible for the public.
The JPEX scandal prompted the SFC to introduce these new measures. JPEX is accused of promoting its services to Hong Kong residents without obtaining a license in the country. Christopher “Kit” Wilson, director of enforcement at the SFC, revealed that due to evasive behavior and unsatisfactory responses from stakeholders, JPEX was placed on the alert list in July 2022. A complex investigation involving multiple jurisdictions was then launched, leading to the issuance of a formal warning in September 2023 and referral of the matter to the police.
The financial fallout from JPEX is estimated to be around $178 million, with over 2,200 complaints filed by affected users. As a result, 11 individuals, including crypto influencers, YouTubers, and employees of the allegedly fraudulent exchange, have been taken into custody for questioning.
The SFC emphasized the risks of dealing with unregulated VATPs and stressed the importance of proper regulation to maintain market confidence. The regulators stated that they would collaborate with local police to establish a dedicated channel for citizens to report suspicious activity and potential legal breaches by VATPs. They also pledged to investigate the JPEX incident thoroughly to bring the wrongdoers to justice.
These new measures by the SFC demonstrate the increasing scrutiny and concern surrounding unregulated cryptocurrency trading platforms. As the crypto industry continues to grow, regulators worldwide are prioritizing the protection of investors and ensuring the integrity of the financial system.
