Hong Kong Chief Says Regulators May Get Powers to Crack Down on Unlicensed Crypto Exchanges: Report

The Securities and Futures Commission said it does not have the power to close unlicensed crypto exchanges.

AccessTimeIconNov 28, 2023 at 5:26 p.m. UTC
Updated Jan 26, 2024 at 3:11 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

If regulators need more powers to crack down on unlicensed crypto exchanges, the "government will actively cooperate," Hong Kong Chief Executive John Lee said on Tuesday, a local outlet reported.

The comments were in response to an investigation into unlicensed virtual-asset trading platform Hounax, which reportedly defrauded people of millions of dollars. By Monday, 145 people said they had been victims of the fraud for a total of HK$148 million ($19 million), the South China Morning Post reported.

Government supervision is needed to protect investors and crack down on unlicensed platforms, Lee said according to the report. The Hounax case follows a similar one involving crypto exchange JPEX, which led to the arrest of six people in September after more than a thousand complaints involving a total of $128 million were filed. The Securities and Futures Commission (SFC) said JPEX was also operating without a license, prompting Lee to call for stronger licensing laws at the time.

Following the Hounax incident the SFC published a list of licensed virtual-asset trading platforms to aid investors when they are deciding which crypto platforms to use. The SFC said it does not have the power to close unlicensed crypto exchanges, the SCMP reported.

Hounax was put on the alert list by the SFC on Nov. 1, and authorities should have gone a step further and blocked the platform from contacting the public to prevent further harm, lawmaker Doreen Kong told a local outlet on Monday.

"How can they just rely on an alert list and say they have issued a message to the public? It's like telling people that it's every man for himself," Kong said.

Edited by Sheldon Reback.




Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.