Crypto Exchanges And ICO Issuers Warned By Hong Kong Regulator For Fraudulent Activitiesbr>
The Hong Kong Securities and Futures Commission (SFC) has announced that it has taken regulatory action against a number of cryptocurrency exchanges and issuers of initial coin offerings (ICO).
In a statement released Today, the SFC said that investors have complained to the commission that they were unable to withdraw cryptocurrencies from their accounts with some exchanges, and that they had suffered significant losses due to “technical breakdowns” of the platforms. Several complaints against ICO issuers alleged unlicensed or fraudulent activities.
The SFC said it has sent letters to seven crypto exchanges in Hong Kong or with connections to Hong Kong, warning them that they should not trade cryptocurrencies, which are defined as “securities” in the Securities and Futures Ordinance (SFO), without a licence.
Most of these cryptocurrency exchanges either confirmed that they did not provide trading services for such cryptocurrencies or took immediate rectification measures, including removing relevant cryptocurrencies from their platforms.
“If investors cannot fully understand the risks of cryptocurrencies and ICOs or they are not prepared for a significant loss, they should not invest,” said Julia Leung, the SFC’s Executive Director of Intermediaries. “Investors who store their fiat currencies and cryptocurrencies with unregulated cryptocurrency exchanges should be aware of the risks of hacking and misappropriation of assets.”
The commission has also written to seven ICO organizers in the country. According to the SFC, most of them confirmed compliance with the SFC’s regulatory regime or immediately ceased to offer tokens to Hong Kong investors.
“We will continue to police the market and enforce when necessary,” said Ashley Alder, the SFC’s Chief Executive Officer. “But we are also urging market professionals to do proper gatekeeping to prevent frauds or dubious fundraising and to assist us in ensuring compliance with the law.”
The SFC urged investors to be wary of the increased risk of extreme price volatility, hacking, and fraud when investing in cryptocurrencies and ICOs, and using services of cryptocurrency exchanges.
Last month, Hong Kong’s Financial Services, the Treasury Bureau (FSTB), and the Investor Education Center (IEC) started a public education campaign on the risks associated with ICOs and cryptocurrencies. The campaign aims to provide the public with a correct and comprehensive understanding of the potential risks of participating in ICOs and cryptocurrency transactions.