Some Hong Kong residents caught up in an alleged HK$120 million (US$15.4 million) cryptocurrency scam have said the platform’s listing as suspicious by the securities watchdog this month came too late as their money had already been locked in by an “investment deal”. One of the more than 130 alleged victims said he had lowered his guard because cryptocurrency platform Hounax appeared to have been recognised by international authorities. The man, surnamed Ng, 50, said the scam was well-executed and had been months in the making. Lawmakers on Monday also called for the government to close a legal loophole that limited the Securities and Futures Commission’s ability to respond to unlicensed-but-not-banned platforms, allowing the latter to continue trading within an “unregulated vacuum”. Hounax platform allegedly scams 131 Hongkongers out of nearly HK$120 million Police on Saturday revealed they had received 88 reports from 131 people who said they had lost nearly HK$120 million. A 69-year-old retired woman allegedly suffered the biggest loss of HK$12 million among the victims, who were aged from 19 to 78. The Securities and Futures Commission added Hounax to its alert list of suspicious virtual asset trading platforms on November 1. The watchdog on Monday said it had received 15 complaints so far concerning the platform. The cases had also been filed with police, it added. Ng, a maintenance worker, said he was cheated out of HK$150,000 and reported his case to police as early as November 14 but had not heard anything back since. He only learned about other cases involving the platform upon finding a related Facebook group almost a week later. He said he first got involved with the scammers who posed as “financial experts” on Facebook in April, and subsequently joined their WhatsApp chat group that provided investment advice on stocks and allowed the fraudsters to build trust. By August, the stocks were not performing well and the “experts” in the WhatsApp group recommended trading cryptocurrencies on the Hounax platform. Ng said, looking back, he realised that most of those in the group of 50-60 people were in on the swindle, with a handful of members being cheated. The accomplices would all say they could retrieve cash from the platform and even showed their account transactions to create an illusion of legitimacy. “They were using methods like that, to make sure you couldn’t tell who was who, so you couldn’t verify information,” he said. Ng said the SFC’s move on November 1 came too late – as a lot of customers’ money was already tied up by then. In September, the platform had a Mid-Autumn Festival buy-one-get-one-free deal on cryptocurrency coins, on the condition customers could not withdraw them until November 12. Binance guilty plea complicates Hong Kong affiliate’s crypto licence application In light of an about HK$1.6 billion financial scandal surrounding another cryptocurrency platform, JPEX, Ng initially took a very cautious approach to Hounax, depositing a smaller amount of HK$20,000. He let his guard down after successfully retrieving his money from the platform in September. He relaxed further when he found out that Hounax was listed in a business registry in Canada and that a search of Hong Kong police’s CyberDefender website – which flags online scams – did not yield any results. “I only dared to invest because of these checks. Who knew it was still a scam after so many checks,” he said. Another victim, an accountant surnamed Wong, told the Post that the official warning had come too late and she had ended up losing about HK$100,000 in the scam. Wong, who is in her forties, said she was lured in by a scammer-run YouTube channel offering financial advice and had joined a WhatsApp chat group in June after following a link left on the video-sharing platform. The scammers then shared quizzes on the group and established trust with the accountant by awarding her HK$1,000 in prize money the first time around. After two more wins, she was convinced to set up a Hounax account to collect the cash. Wong said she had let her guard down after discovering the company was registered as a “money services business” in the US and Canada, adding that she had managed to make two successful withdrawals before mid-September. HTX and another crypto platform linked to Justin Sun lose millions in hacks But she felt suspicious about some details of the business’ operational model, including the serious miscalculation of handling fees and scammers offering to loan her large sums of money in August and September. She refused to borrow the money and left her account inactive, only reporting the case to police on November 13 after the platform refused to let her withdraw any money, she said. Wong said she later realised most of the people in the WhatsApp group were involved in the scam as their profiles all disappeared, alongside the company’s social media accounts, on November 19 when it became clear the cash could not be withdrawn. “The warning to the public was too late in this whole incident,” she said. “These scams are nothing new, but the planning and execution were done so meticulously.” Meanwhile, lawmakers Doreen Kong Yuk-foon and Johnny Ng Kit-chong slammed the Securities and Futures Commission’s efforts to warn the public as insufficient. “There are hundreds of firms listed as ‘suspicious’ by the SFC,” Kong said. “They can’t say ‘we have already informed you of that’. “It’s like saying ‘best of luck’ to the public. If they thought the platform was suspicious, why couldn’t more be done? Their actions are very passive now.” The lawmaker also highlighted loopholes in the existing regulatory mechanism that prevented the watchdog from responding proactively to unlicensed platforms, since the latter were not banned and existed in a legal grey zone. “In a developed society such as Hong Kong, these things should not be happening,” she said. “The SFC cannot hide behind such an excuse.” Forget crypto: Hong Kong Web3 events focus on what’s next for blockchain Ng, who also serves as convenor for an anti-deception alliance, said the watchdog could have issued a warning far sooner. On Saturday, police said fraudsters had provided quick returns on victims’ investments to build trust, but the numbers were meaningless and made up by the scammers, who had already transferred the deposited money. The force said that, when victims tried to withdraw their money later, the platform’s “investment managers” would reject the requests using different excuses or charge them a “verification” fee of up to 80 per cent of their initial funds, claiming it was a requirement of an international anti-money-laundering organisation. The platform, which claimed to be run by a Singaporean company, started operating early this year and appeared to target Hong Kong investors, according to police.