- Hong Kong has suffered several high-profile crypto exchange scandals.
- As a result, the SFC has boosted its oversight.
- Two new crypto exchanges have been added to the agency’s alert watchlist.
Amid a surge in cryptocurrency-related scams affecting Hong Kong residents, including the fallout from the JPEX and Hounax scandals, the Securities and Futures Commission (SFC) has ramped up its oversight of the virtual asset industry.
Continuing this heightened scrutiny, the regulatory body added two new crypto exchanges, EDY and HKCEXP, to its alert list of suspicious digital asset platforms on March 25.
SFC Steps Up Oversight
Stepping up its oversight of crypto exchanges, the SFC stated that the EDY platform had falsely claimed affiliation with an unnamed financial institution in Hong Kong and a “digital token system” developed by another financial firm. However, the regulator confirmed these associations are non-existent. Adding to the concerns, investors have reported an inability to withdraw funds after making deposits on EDY’s platform.
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The SFC reiterated that while EDY’s website is now offline, the public should remain cautious of platforms with similar names that may emerge to attempt to defraud investors.
Turning to HKCEXP, the SFC alleged the crypto exchange is engaged in fraudulent activities, including charging “exorbitant” fees for withdrawing funds. The regulator added that HKCEXP provided a fake Hong Kong address and misled investors by falsely claiming to be an SFC-registered company.
While EDY and HKCEXP are relatively unknown platforms, the SFC’s crackdown has extended to major names like Bybit and MEXC.
Crypto Exchanges in Crosshairs
The SFC’s scrutiny has not been limited to smaller platforms like EDY and HKCEXP. Recently, the regulator added major crypto exchanges Bybit and MEXC to its alert list of suspicious virtual asset platforms.
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MEXC found itself in the crosshairs on March 15, with the SFC alleging the exchange promoted its services to Hong Kong residents without obtaining the necessary crypto trading license. This marked the second warning against MEXC, as it was previously added to the alert list on February 9 over suspected fraudulent activities, including reports from users facing difficulties in withdrawing their funds.
Bybit, another prominent name in the crypto sphere, was flagged by the SFC on March 14 for carrying out unlicensed activities in Hong Kong. The exchange stands accused of operating within the city-state without the necessary regulatory approvals and licenses.
On the Flipside
- Global scrutiny of crypto exchanges is stepping up, not just in HK.
- Legitimate exchanges prioritize transparency, security, and investor protection measures.
Why This Matters
Continuing to flag suspicious crypto exchanges, the SFC aims to underscore the critical need for transparency and accountability in the virtual asset space. However, regulators find themselves engaged in a constant game of cat and mouse, as scam exchanges seemingly operate with impunity, often setting up shop only to vanish with funds at will.
Read more about Hong Kong’s push for crypto exchange oversight here:
Hong Kong Crypto Exchanges Must Register: SFC Issues Warning
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