Hong Kong crypto investors blocked from two more sites as authorities play whack-a-mole

In an effort to clamp down on a wave of crypto fraud, Hong Kong regulators issued a fresh warning to the public on Wednesday and said police are poised to block access to two sites, HongKong DAO and BitCuped.

The Securities and Futures Commission, or SFC, also issued cease and desist letters to the website operators and asked the platforms to stop listing HongKong DAO’s token for purchase.

Under fire again

The moves come as Bitcoin soaring valuation — it has soared 15% in the last seven days to more than $43,000 — is stoking demand for crypto in Hong Kong. For the last year, the city’s political and business leaders have sought to revive the locale as Asia’s top crypto hub.

Yet following steady criticism from lawmakers, the SFC has urged investors to be wary of ripoffs in Hong Kong’s rollicking crypto marketplace.

Last week, the agency came under fire yet again after the police launched a probe of Hounax, an unlicensed exchange using influencers to promote its offerings.

But Hong Kong Legislative Council Member Doreen Kong said warnings aren’t enough and are calling for more concrete actions against suspected platforms.

Hounax has defrauded at least 145 Hong Kong residents, resulting in losses of HK$148 million, about $19 million, according to the police’s Commercial Crime Bureau. Scammers who impersonated investment experts lured people onto the platform, officials said.

In September, more than 2,600 Hongkongers lost an estimated HK$1.6 billion (US$204 million) when JPEX, an unlicensed crypto exchange, collapsed.

While 67 individuals have been arrested in connection with the case — including influencers and local crypto promoters — police appear to still not know who was behind the exchange.

Nine platforms

Responding to growing pressure, the SFC listed nine platforms, including HongKongDAO and BitCuped in November.

HongKongDAO, also known as the Hong Kong Digital Research Institute, came under scrutiny after falsely claiming it had applied for an SFC licence in July 2022, and for wrongly suggesting it was licensed under the former virtual asset regime.

BitCuped was flagged for saying it had affiliations with HKEX — the company that owns the Hong Kong Stock Exchange — and Chairman Laura Cha and CEO Nicolas Aguzin. The SFC said neither is connected to BitCuped.

The SFC said BitCuped’s Chinese and English language Telegram groups had more than 10,000 and 1,700 members, respectively.

But as far as crypto sites go, BitCuped may not be the most convincing: its website claims the company was founded in Iceland in 1891.

Got a crypto scam story? Contact the author at callan@dlnews.com