Recently, the Hong Kong Securities and Futures Commission (SFC) has once again exposed a number of suspicious virtual asset trading platforms and issued a warning to the public. This sends a clear signal to the market: the Hong Kong government is closely monitoring the latest developments in the cryptocurrency field and strictly cracking down on illegal financial activities to ensure market fairness and transparency.
So far in 2021, the SFC has disclosed a total of 39 suspicious platforms related to the crypto market, including exchanges MEXC and Bybit. What are the suspicious virtual asset trading platforms defined by the Hong Kong Securities and Futures Commission, and why are these platforms warned?
What is a "suspicious" virtual asset trading platform?
Bitrace divides the suspicious platforms disclosed by the SFC into three categories: platforms established for the purpose of conducting fraudulent activities, platforms that have real business but part of their business involves fraud, and platforms that have real business but have not obtained a license.
This table is compiled based on the warning list disclosed by the SFC
1. Platforms established to conduct fraudulent activities
Such platforms have been warned by the Hong Kong Securities and Futures Commission for impersonating official exchanges and fabricating false corporate information to induce users to invest. Take the platform impersonating MEXC, which is engaged in fraudulent activities, as an example. The website claims to be a virtual asset trading platform entity and is suspected of operating a fake website as shown in the figure to engage in fraudulent activities. The victim was asked to deposit funds into a designated bank account for investment purposes, but encountered difficulties in withdrawing funds.
Fake MEXC website posted on SFC website
In the past, such websites have frequently appeared in a large number of investment and financial fraud activities under the guise of "foreign exchange investment" and "quantitative cryptocurrency investment", causing significant financial losses to innocent overseas Chinese, foreigners, and local non-professional investors.
2. Platforms with real business but some of their business involves fraud
A typical representative of this type of platform is JPEX. Last year, the Hong Kong Securities and Futures Commission pointed out that the cryptocurrency trading platform JPEX claimed that it had received investment from a Hong Kong listed company and claimed to have obtained a license to operate a virtual asset trading platform, which was suspected of false advertising. The next day, JPEX restricted users from withdrawing coins due to high handling fees. In addition, the exchange offered extremely high returns for some of its products, but some investors complained that they failed to successfully withdraw virtual assets or their account balances were changed, and eventually it quickly collapsed.
Such institutions are often not used solely to carry out fraudulent activities and usually have normal main businesses. However, in the course of carrying out some of their business activities, they intentionally or unintentionally violate the bottom line of the law.
3. Platforms with real business but no license
According to information disclosed on the SFC's official website, the official exchanges MEXC and Bybit targeted Hong Kong investors for business promotion without obtaining any license from the SFC, and were therefore included in the SFC's warning list (No. 20 and 21).
Although this does not mean that the business activities of the relevant trading platforms in other regions are non-compliant, it still caused negative damage to the relevant brands in public opinion. It can be seen that compliance is the cornerstone of the operation of centralized trading platforms.
Is Hong Kong's regulatory policy effective?
Bitrace has long been paying attention to the virtual asset trading market in Hong Kong. According to the capital risk audit of the local VAOTC group business addresses, the scale of crypto funds (USDT) associated with fraudulent activities entering the Hong Kong cryptocurrency secondary market through over-the-counter trading channels has significantly decreased since the first quarter of 2024, and the current monthly capital scale has been halved compared to the peak.
The reason may be that on February 2024, 2, the Hong Kong government plans to establish a virtual currency over-the-counter trading platform (VAOTC) licensing system, requiring all VAOTCs to apply for a license from the Customs, which has led to the crowding out of some risky funds. This shows that the intervention of local regulators has promoted the maturity of Hong Kong's cryptocurrency market.
Write at the end
The Hong Kong Securities and Futures Commission is gradually building a compliant cryptocurrency regulatory environment to provide security for investors and promote the industry to develop in a more mature and standardized direction. For local operators who are committed to compliant operations, this will also be a good opportunity to build brand trust and business security moats.
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Source: Web3Caff
Article author: Bitrace