Hong Kong’s Securities and Futures Commission blacklists, blocks access to 2 cryptocurrency websites suspected of scamming investors

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Hong Kong’s securities watchdog has blacklisted and blocked access to two cryptocurrency websites suspected of scamming investors using false claims, after it was recently accused of acting too slowly in alerting victims who allegedly lost more than HK$1.6 billion through two fraudulent platforms. Securities and Futures Commission (SFC) director of enforcement Damon Cheng Tak-ka on Wednesday said the two websites – HongKongDAO and BitCuped – were placed on its alert list after they were suspected of spreading false information about themselves and their business. The SFC found HongKongDAO had sold a digital token named “HKD” and claimed to have applied for operating licences with the commission and the government. Cheng said the website’s claims were false and that the SFC had placed it on its alert list on November 24. “Through the help of police, the SFC asked internet service providers to block the website and also issued a cease and desist letter to trading platforms to stop trading tokens issued by HongKongDAO,” he said. The watchdog found that HongKongDAO operated two chat groups, one in Chinese with more than 10,000 members and the other in English with over 1,700 people, and had touted the HKD token as having a high market value to attract investors. Hounax changed website address 32 times to evade Hong Kong authorities “Once you press the ‘buy’ button on the website, it will divert people to another site for payment,” Cheng said. The other website, BitCuped, was found to have falsely listed the chairman and CEO of bourse operator Hong Kong Exchanges and Clearing (HKEX) as its own. “BitCuped claims on its website that ‘Laura Cha’ and ‘Nicolas Aguzin’ served as its chairman and chief executive officer respectively, when in fact neither of them has any affiliations with it,” Cheng said. Cha is HKEX chair while Aguzin is CEO. The website claimed to provide trading services in virtual assets and stocks and was placed on the blacklist on November 10. The watchdog did not reveal the number of victims or the amount of monetary loss related to the two sites as a police investigation was under way. How to spot a scam? Hong Kong cybersecurity experts share possible ‘red flags’ Keith Choy Chung-fai, the SFC’s interim head of intermediaries, warned the public to be wary of befriending strangers online. “Scammers use online platforms such as Facebook, WeChat, WhatsApp, Telegram and Tinder and pretend to be investment gurus or good-looking people to befriend victims and lure them to join these chats or sign up for classes,” he said. “These proclaimed investment tips or insider trading info are not so readily available, do not trust them, do not give out your personal information or believe those unreasonable returns.” The SFC’s move follows a case in late November in which 158 residents claimed to have lost about HK$155 million (US$19.8 million) after being asked to invest in cryptocurrency platform Hounax. Hong Kong must address money-laundering risks for crypto changers: customs chief The watchdog said at the time it did not have the power to halt Hounax’s operation earlier, as the platform was unregulated and not licensed by the SFC. Another scandal erupted in September centred on the JPEX cryptocurrency exchange. It formed the single largest financial fraud case in the city’s history, with 2,629 alleged victims and more than HK$1.61 billion in losses, exposing flaws in the regulatory regime amid a push to transform Hong Kong into a virtual asset hub. The watchdog was criticised for failing to name JPEX in its initial warnings about the platform’s suspicious operation.

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