July 21, 2024
Hounax Scam Adds to Regulatory Concerns
Latest Cryptocurrency News

Hounax Scam: Hong Kong Officials Report $18.9 Million Loss, 145 Users Affected

Hong Kong officials disclosed on November 27 that an unlicensed cryptocurrency exchange, Hounax, had scammed 145 users, resulting in a loss of 148 million HKD ($18.9 million), as reported by the local media outlet Shenzhen Commercial News. On November 25, local authorities held an initial press briefing to notify Hounax about the reported incidents.

The Hong Kong Securities Regulatory Commission (SFC) stated that as of the 27th, they had received 18 complaints about the exchange, with amounts ranging from 12,000 HKD to 10 million HDK ($1,539-$1.2 million).

According to local law enforcement, Hounax purported itself as a licensed platform operating in accordance with legal financial institutions. However, despite being flagged as a suspicious platform by the SFC on November 1, it continued its operations, prompting a caution to users about its risks.

Hounax allegedly attracted local customers by falsely claiming the original Coinbase technical team founded it, held a license from Canadian authorities, and was considering investments from renowned entities like Sequoia Capital and IDG Capital.

Ke Yongn, the chief inspector of the Commercial Crime Investigation Section of the Hong Kong Police, mentioned that the platform used social media to lure victims, although the official Facebook page is reportedly offline. The SFC has identified nine suspicious crypto investment platforms, including Hounax, JPEX, Hong Kong Digital Research Institute, BitCuped, FUBT, futubit/futu-pro, EFSPD, OSL trading, and arrano.network.

This incident comes after a significant scandal involving the JPEX exchange earlier in the year. Authorities received over 2,000 complaints from JPEX users, resulting in reported losses of around $180 million. To date, 66 individuals have been arrested in connection with the scandal.

These events prompted local regulators in Hong Kong to tighten crypto regulations to prevent further industry disasters. However, regulators have clarified that the country’s one-year grace period for crypto exchanges will remain unchanged.

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