The decision to enhance regulatory measures follows the JPEX scandal, which has been described as one of the region’s most significant financial fraud cases.
In the wake of the recent JPEX scandal that rocked Hong Kong’s financial landscape, the country’s Securities and Futures Commission (SFC) has announced measures to bolster oversight of crypto exchanges in the region. The move comes after the SFC faced public demands to disclose information regarding digital asset trading platforms seeking operational licensing in the country.
According to an announcement on September 25, the SFC, one of Hong Kong’s principal financial regulators, has introduced a series of new measures aimed at providing transparency to the public and honoring investors’ requests to publish a list of crypto companies that have applied to obtain licenses in the country. It was revealed that:
“In light of recent public concerns about unregulated virtual asset trading platforms (VATPs), the Securities and Futures Commission (SFC) is putting in place a series of measures to reinforce information dissemination and investor education.”
Following JPEX Scandal SFC to Publish Names of Unregulated Crypto Exchanges
As a condition to enable crypto exchanges in the country to service retail customers under the recently introduced law in June, the SFC has further imposed many stringent requirements, including ensuring suitability in the onboarding process, enhanced token due diligence, admission criteria, and disclosures.
The financial regulator said it would provide greater transparency for investors by publishing comprehensive lists of virtual asset trading platforms (VATPs). These lists will encompass licensed platforms, those deemed licensed, crypto exchanges in the process of winding down operations, and those with pending license applications.
Furthermore, the SFC will feature a dedicated list of suspicious VATPs on its website to protect investors against bad actors. The move aims to empower the public to identify potentially unregulated VATPs in Hong Kong.
The JPEX Crypto Scandal
The decision to enhance regulatory measures follows the JPEX scandal, which has been described as one of the region’s most significant financial fraud cases. The crypto exchange, JPEX, had allegedly offered its services to Hong Kong residents without obtaining a license, leading to massive losses for investors.
The country’s local law enforcement said it has received over 2,300 complaints from investors accusing the exchange of engaging in fraud. The financial fallout from the company is estimated to be around HK$1.43 billion ($182 million) in assets.
The SFC’s director of enforcement, Kit Wilson, explained that the investigation into JPEX had revealed evasive behavior from stakeholders and unsatisfactory responses to information requests. The lack of cooperation prompted a complex investigation across various jurisdictions, and the company was placed on the SFC alert list in July 2022.
To date, the SFC has taken at least 11 people including the company’s staff and crypto influencers, YouTubers in custody for questioning regarding the allegations.
SFC to Launch Educational Campaign against Crypto Frauds
To address these issues and protect the interests of investors, the SFC intends to collaborate closely with local law enforcement authorities to establish a dedicated channel for citizens to report suspicious activity and potential legal breaches by VATPs. The ultimate objective is to safeguard investors and preserve market confidence.
According to the announcement, the SFC, alongside its subsidiaries, the Investor and Financial Education Council (IFEC), will open a public campaign to educate traders, investors, and anyone engaging in crypto about the risks associated with the asset class.
“The SFC and the IFEC will soon launch a public campaign to raise awareness in guarding against fraud and will further enhance investor education by various means such as mass media, social media, and education talks, facilitating the public’s understanding of the risks associated with VAs and potential fraud,” said SFC.
Meanwhile, only two crypto trading platforms, OSL Digital Securities Limited and Hashkey Exchange have obtained licenses to serve Hong Kong’s retail customers since implementing new virtual asset rules on June 1.
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Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.
Source: https://www.coinspeaker.com/hong-kong-sfc-jpex-crypto/