Hong Kong law enforcement initiated an inquiry into the cryptocurrency trading platform Hounax over the weekend following complaints from 131 individuals who alleged losses amounting to HK$120 million ($15.4 million) in a purported scam.
According to a South China Morning Post report, local police announced on Saturday the commencement of an investigation into the alleged fraudulent activity and expressed the intention to make arrests promptly. Victims ranged from 19 to 78 years old, with a 69-year-old retired woman reportedly losing HK$12 million to the scheme.
Chan Wai-kei, superintendent of the Commercial Crime Bureau, informed the media that the scam involved enticing individuals to invest in cryptocurrency through the Hounax platform. However, when investors attempted to withdraw their funds, they encountered obstacles preventing the transaction.
Earlier this month, Hong Kong’s Securities and Futures Commission (SFC) identified Hounax as a suspicious virtual asset trading platform. The SFC clarified on its website, “The company claims to be a cryptocurrency trading platform which is in business cooperation with a financial institution and a venture capital firm when this is not in fact the case.” The commission highlighted Hounax’s targeting of Hong Kong investors through specific user log-in details and social media channels.
Hong Kong legislator Johnny Ng emphasized in an interview with Now.com on Monday that the SFC should adopt a more proactive role in engaging with unlicensed cryptocurrency trading platforms to identify problematic entities early on and mitigate potential risks.
The investigation into Hounax comes after the police’s September inquiries into the cryptocurrency trading platform JPEX. As of Sunday, authorities received reports from 2,623 victims involving approximately HK$1.6 billion in the JPEX case.
Sixty-six individuals related to the case have been arrested thus far. In a parallel development, Taiwan prosecutors detained the chief partner of JPEX Taiwan and a lecturer on suspicions of violating banking and anti-money laundering laws earlier this month.