The nameless creators of an unlicensed crypto exchange in Hong Kong allegedly absconded with $19 million, leaving platform customers within the lurch and the digital-assets-friendly metropolis dealing with its second main crypto scandal in exactly two months.
Some 145 individuals have been affected by a hack of the Hounax exchange as of Tuesday, in line with police, and now Hong Kong’s model of the SEC, the Securities and Future Fee, is going through criticism that it’s been too lax in its method towards crypto.
Hounax lured in retail traders by way of social media with claims that it was cofounded by the unique Coinbase technical team and had a Canadian Cash Companies Enterprise license. The exchange additionally stated it was courting investments from Sequoia Capital and IDG Capital, however in early November the SFC designated it a suspicious platform and warned traders to steer clear.
After traders made deposits, the Hounax app allegedly displayed rising balances however, according to authorities who spoke to local media, these funds already had been drained.
Though crypto buying and selling is banned in mainland China, Hong Kong more and more has embraced digital property, introducing a licensing scheme in June and permitting for some sorts of crypto buying and selling.
The Hounax hack comes after more than $120 million disappeared from the unlicensed JPEX crypto exchange in September. Since then, 66 people have been arrested in connection with the case, together with influencers comparable to Joseph Lam and JPEX staff.
Some Hong Kong lawmakers have criticized the SFC for not doing extra to stop such exploits. Lawmaker Doreen Kong Yuk-foon of the Election Committee stated Hong Kong’s crypto regulator may have stepped in earlier and should shut down unregulated exchanges in order to not go away “each investor to themselves,” in line with the Standard.
And Hong Kong Chief Govt John Lee Ka-chiu stated on Tuesday that the “authorities will actively cooperate” if the SFC requires extra energy to crack down on unregulated exchanges like Hounax.