Police Still Searching for Answers in Investigation of HKCex Exchange

Hong Kong's Criminal Investigation Department is following up allegations of fraud, but is yet to produce results.

Jun 26, 2014 at 9:00 p.m. UTC
Updated Sep 11, 2021 at 10:55 a.m. UTC

Hong Kong's police force continues to investigate HKCex after a customer lodged a report of fraudulent activity in May, claiming he was unable to withdraw 16.5 BTC from the cryptocurrency exchange.

The customer, Dominic Rivers, told CoinDesk he then made a statement to the Hong Kong police's Criminal Investigation Department (CID) on 3rd June, explaining:

"I hope [the police] track these guys down. I hope an example is made of them and I hope I get my money back."

According to the case's investigating officer, however, progress has been slow. The officer said he had written to MG Foreign Exchange Limited, which was listed as the owner of HKCex on its website, but has received no reply.

The news comes amid continued uncertainty regarding the Hong Kong-based exchange, which had previously boasted upwards of $20m in funding, among a number of increasingly troubling claims.

An earlier investigation into HKCex by CoinDesk revealed that its investment and partnership claims with companies like Hang Seng Bank, Foxconn and the insurer AIA were false.

Lone complaint

The investigating officer told CoinDesk he would be contacting the firm again, but added that no other reports on the matter had been lodged.

Further, he indicated that following up on the report has posed its own issues:

"We are still working on the case, but in fact, I can honestly tell you we have encountered difficulties [...] we can't confirm where the bitcoin is."

Rivers said he had also written to the Joint Financial Intelligence Unit, which investigates suspicious financial activity in the Special Administrative Region, but received no response from them.

He had been attracted to HKCex by the arbitrage opportunity provided with its high BTC prices – buying bitcoin on Bitfinex to sell them on HKCex. Like other customers, his troubles started when he attempted to withdraw his funds.

River's withdrawal was delayed, with the exchange requesting a notarised copy of his passport – a frustration other customers of the exchange have also complained of.

Searching for answers

In Rivers' case, he was away from Hong Kong when he received the request from HKCex. He then asked his wife to get a copy of his passport notarised and drop it off at the HKCex address listed on its website.

When she arrived at the address, however, she couldn't find the exchange's office.

"My wife took it along to the address where I was supposed to post it, but there was nothing there. There is a 7-11, a kindergarten and some apartments. None of them had anything to identify them as HKCex," he said.

Rivers, who is a pilot and former server engineer, is now convinced that HKCex was an "elaborate hoax" designed to dupe traders like him who performed some cursory checks on the exchange before trading. He added:

"It didn't seem like a one-man band. There was a lot of background information about it. They did quite a lot of homework, a lot of preparation work."

According to a crowdsourced spreadsheet by HKCex customers, the exchange owes $133,765 worth of withdrawals in bitcoin, litecoin and namecoin. The website – HKCex.net – no longer loads.

Featured image: dlee / Flickr

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