- Hong Kong closes its crypto exchange licensing program.
- Application-less MEXC remains active in Hong Kong, triggering pushback from regulators.
- Fraud allegations continue to follow MEXC.
Hong Kong’s push to regulate its burgeoning cryptocurrency industry reached a pivotal point on February 29, as the deadline for crypto exchanges to submit license applications passed. Under the new regime, platforms facilitating crypto trading for Hong Kong investors must obtain a license or cease operations within the city-state by May 31.
Against this backdrop, the Securities and Futures Commission (SFC) fired a warning shot against MEXC, accusing the crypto exchange of actively courting Hong Kong investors despite failing to submit a license application.
MEXC Crypto Exchange Under Spotlight
The SFC issued a public notice on March 15 condemning the MEXC crypto exchange for actively marketing its services to Hong Kong investors despite failing to apply for the city state’s mandatory virtual asset trading platform (VATP) license.
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The financial watchdog contended that MEXC’s marketing without complying with licensing requirements constituted a breach of Hong Kong’s laws and violated anti-money laundering and terrorist financing rules.
In response to the violations, the SFC posted a new entry for MEXC on its “Suspicious Virtual Asset Trading Platforms Alert List.” The list aims to provide the public with a comprehensive list of dubious crypto firms. This marked the second entry for MEXC after the SFC posted an alert on February 9 over suspicions of “engaging in fraudulent activities.”
MEXC Under Fire
The SFC’s accompanying announcement for the February 9 entry warned the public that MEXC is suspected of fraud. According to the regulator, victims were lured into making bank deposits to buy cryptocurrencies on websites allegedly operated by MEXC via social media. However, these individuals found themselves unable to withdraw their funds.
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The SFC’s notice listed several URLs, including https://www.mexczx.icu/, though it remains unclear whether MEXC was directly involved or if these were scammers impersonating the crypto exchange. Nonetheless, the regulator’s decision to call out MEXC underscored the seriousness of the allegations and the perceived risks associated with the platform.
Adding to the cloud of suspicion, MEXC faced separate allegations of defrauding winning traders on its platform. Last month, allegations emerged that MEXC acts as both a broker and market maker, creating a potential conflict of interest and motive to restrict the accounts of winning traders to avoid paying out profitable trades. These allegations continue to circulate, further compounding the doubts surrounding MEXC’s business practices.
On the Flipside
- MEXC is also accused of listing scam tokens.
- OSL and HashKey remain the only licensed crypto exchanges in Hong Kong, suggesting the SFC is taking the time to review applicants.
- The Hong Kong market is estimated to have just 245k crypto owners, which may discourage crypto firms from complying with the SFC licensing regime.
Why This Matters
The SFC’s decisive action against MEXC underscores Hong Kong’s determination to create a robust regulatory environment that prioritizes investor protection. By clamping down on unlicensed platforms, the financial hub aims to enhance its credibility as a trusted jurisdiction in the digital asset space. However, of more immediate concern is MEXC’s lack of response/action to address mounting allegations.
Hong Kong regulator alleges MEXC is involved in fraudulent activity. Read more here:
Hong Kong Flags MEXC for Suspected Crypto-Related Fraud
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