On June 6, the Hong Kong Securities and Futures Commission disclosed a case: The Eastern Magistrates' Court of Hong Kong ruled that Huang Moumou was guilty of establishing a Telegram chat group without a license and providing securities investment advice to users in the group every day. He was fined 20 yuan and ordered to pay the investigation costs of the Securities and Futures Commission.
Key points: securities, unlicensed, Telegram community, providing investment advice. Then the question is, there are many crypto project or virtual currency investment opinion groups on Telegram, and some virtual currencies are also recognized as securities in some regions. Will these group owners also face the dilemma of Huang Moumou in this case?
Regarding this case and its impact on the crypto industry, Mankiw LLP specially invited several senior Web3.0 lawyers to share their views.
In the cryptocurrency circle, there is a profession called "Ever-earning Blogger". The common operation routine is to share their beautiful crypto investment returns on social platforms (although sometimes photoshopped pictures are used) to attract fans to join paid groups. They share wealth codes in the groups and guide fans to invest in virtual currencies. Considering the regulatory policies on virtual currencies in mainland China, many friends think that Hong Kong is very friendly to virtual currencies, so they tend to register companies in Hong Kong to engage in this business.
Little do people know that Hong Kong may have strict supervision on such matters. This case of guiding group members to invest without a license is actually a reminder to various bloggers in the crypto circle who provide investment operation guidance/reference to users through paid groups - Hong Kong, China is friendly to virtual currencies, but its supervision and punishment will be much clearer and more formal than in China.
I hope friends in the circle will pay more attention to this.
Huang Mingzhong was fined by the Hong Kong court for providing investment advice without a license. The license here refers to the Hong Kong Securities Regulatory Commission's Type 4 license (providing advice on securities). Institutions or individuals holding Type 4 licenses can provide clients with investment advice on selling or buying securities, as well as issue research reports or analyses on securities. It ensures the professionalism, compliance and protection of investors' interests in providing securities investment advice services.
Under the Securities and Futures Ordinance, unless there is a specific exemption, any person who conducts regulated activities in Hong Kong, including providing securities investment advice, must obtain a corresponding license from the SFC. Providing such services without the required license is a serious crime.
First, Hong Kong itself tends to be Anglo-American legal system, and its overall legal style is influenced by the UK, which is very strict in combating securities crimes. Second, Hong Kong itself is positioned as an Asian financial center, and it attaches more importance to financial compliance. Therefore, if you want to engage in financial affairs in Hong Kong, you definitely need administrative permission and approval. In simple terms, you need a license to engage in this industry.
In the case mentioned by the Hong Kong Securities and Futures Commission, Huang provided paid consultation related to securities business in the Telegram group chat, but he did not hold a license or obtain permission, and provided services in a highly anonymous place like Telegram, which obviously circumvented Hong Kong's regulations on securities business and had subjective malice, so he was sentenced in accordance with local securities laws. There are similar crimes in the mainland criminal law, such as illegal business operations.
It is important to remind you that securities is a broad concept. Any behavior defined by the CSRC is securities-related business. Whether you are engaged in securities or cryptocurrency business, you need to comply with the local regulatory rules. If you do not obtain qualifications or licenses and still want to engage in business activities, it will constitute a crime.
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Article author: Attorney Mankiw