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Published: 17:50, September 25, 2023 | Updated: 18:01, September 25, 2023
SFC to list suspicious platforms in wake of JPEX scandal
By Liu Yifan
Published:17:50, September 25, 2023 Updated:18:01, September 25, 2023 By Liu Yifan

This undated file photo shows the logo of the Securities and Futures Commission (SFC). (PHOTO PROVIDED TO CHINA DAILY)

The Securities and Futures Commission (SFC) on Monday said it would publish a list of cryptocurrency exchanges that have applied for a license for retail trading and suspicious platforms as the downfall of the unlicensed platform JPEX continues to ferment.

Four operators – Hong Kong Virtual Asset Exchange, HKBitEx, Hong Kong BGE Ltd and Victory Fintech Co Ltd – have applied for official approval, SFC’s licensing director Wong Lok-yan told a morning press conference, adding that being an applicant does not mean that the applicants will comply with the regulator's requirements. 

“The use of this list is only to check whether virtual asset trading platforms out there are misrepresenting the licensing status, so that is the purpose of the list,” Wong added.  

At present, only two virtual asset trading platforms – HashKey Group and OSL Digital Securities – are licensed to offer their services to retail users.

The Securities and Futures Commission (SFC) is also considering providing more information about unregulated virtual asset platforms to enable the public to enhance their vigilance at an early stage

SFC will also release a list specifically targeting suspicious virtual asset trading platforms to raise  awareness about unlicensed or suspiciously operated platforms in the local market.

The watchdog is also considering providing more information about unregulated virtual asset platforms to enable the public to enhance their vigilance at an early stage.

The SFC's move came after JPEX was found to be operating in the city without a license, which sparked widespread concern over the financial hub’s ambition to turn itself into a virtual asset hub. 

ALSO READ: More arrests, SFC says JPEX on its radar since '22

More than 2,300 users have filed complaints about JPEX, reporting losses of over HK$1.4 billion ($180 million). Eleven people, including some popular influencers, have been arrested on suspicion of conspiracy to defraud. 

Acknowledging the global market volatility and regulatory challenges, Livio Weng, chief operating officer of HashKey, said the public should choose licensed platforms for crypto investing, as this can effectively protect their asset security, especially inexperienced virtual asset investors. 

Additionally, it is important to establish the correct investment mindset and not believe in products that promise high yield or get-rich-quick schemes, Weng added. 

“From an industry perspective, the most urgent task at hand is to accelerate the licensing process, innovate mechanisms, and make licensed exchanges competitive, thereby avoiding the situation where inferior products drive out the good ones in the market, allowing the market order to return to a healthy state," he said. 

Tony Petrov, chief legal officer at identity verification platform Sumsub, said the regulator may consider marketing and advertising rules for the industry to improve the law enforcement mechanism.

“A responsible approach to marketing and advertising is an important aspect of provision of any high-risk financial instruments or products. Fair positioning of the crypto assets and risks of investing could reduce the potential harm and financial losses of the customers and additionally improve public perception,” he said.

READ MORE:JPEX case: Police get over 1,600 complaints involving $153m

Petrov added that the authorities should enhance the collaboration and information sharing with regulators in foreign jurisdictions to ensure the effectiveness of regulation and enforcement efforts. 


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