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Hong Kong’s Securities and Futures Commission (SFC) has allied with the Police to establish a group to monitor and investigate crypto exchange-related crimes. This development comes amid scandals involving the Dubai-based JPEX exchange, a leading Hong Kong crypto industry player.
The SFC revealed its latest move in an October 4 announcement, noting that it formed the group after a meeting with the Hong Kong Police Force on September 28.
Hong Kong Securities Regulator Probe Crypto Exchanges Following JPEX Scandal
According to the SFC, this group will probe into illicit activities connected to virtual assets trading platforms (VATPs) in Hong Kong. This move stemmed from the ongoing investigation into illegalities surrounding JPEX.
The exchange allegedly promoted its services without obtaining an appropriate license from the SFC. In addition, JPEX’s illegal activities reportedly caused the loss of about $166 million in assets belonging to over 2,086 investors. This has been tagged as the largest fraud case ever recorded in Hong Kong.
Furthermore, following a series of probing, the Police arrested 18 people, which it believed were connected to the JPEX scandal. This event reflects the need for more stringent regulatory oversight of cryptocurrency exchanges in Hong Kong.
The JPEX exchange halted crypto assets transactions on its Hong Kong platform on September 18, citing unfair treatment by relevant institutions and negative news that caused its liquidity partners to freeze its funds.
Hong Kong Tightens Regulatory Oversight On Crypto Exchanges
Previously, a former SFC official, Angelina Kwan, said Hong Kong may tighten virtual assets market regulations. The new working group will monitor the illegalities of VATPs and report all shady activities. In addition, it will assess the risks and threats related to the identified suspicious exchanges and participate in investigations.
Furthermore, the group comprises officials from the Hong Kong Police’s commercial, cybersecurity, and financial intelligence and investigation departments. It also comprises officials from the SFC’s enforcement division.
Christopher Wilson, the SFC’s enforcement director, commented on the development. He said the agency is committed to deploying resources in fighting troublesome virtual assets trading platforms and protecting investors.
Also, the HKPF’s assistance commissioner, Eve Chunge Wing-man, said the joint group would proactively share intelligence and respond to issues related to VATPs. Their activity will ensure the safety of Hong Kong investors and the general public.
Meanwhile, the SFC has published a list of licenses. Unlicensed and suspicious VATPs, including those about to close down. The list also includes virtual assets trading platforms (VATPs) whose applications are pending approval from the SFC.
In the announcement, the regulator reminded investors that all entities on the list of VATP applicants have yet to obtain licenses from the SFC. And so, these entities may need to be more compliant with the agency’s requirements.
Additionally, the regulator warned investors about the risks of trading cryptocurrencies on unregulated platforms. The reason is that investors may lose their entire investments if such a platform ceases operation, collapses, or suffers hack or fund misappropriation.
Featured image from Pixabay and chart from TradingView.com