On March 4, 2024, the Securities and Futures Commission (SFC) of Hong Kong issued a public notice regarding the cryptocurrency exchange BitForex for alleged fraudulent activities. Despite being based in Hong Kong, BitForex lacks the necessary license mandated by the country’s regulatory framework for digital asset operators. This advisory underscores the SFC’s commitment to upholding integrity and regulatory compliance within the crypto sector.
The SFC’s notice raised concerns about potential virtual asset fraud associated with BitForex. Notably, BitForex has neither obtained SFC licensure nor submitted an application to operate a virtual asset trading platform (VATP) in Hong Kong. Investors are advised to exercise caution when engaging with unregistered Bitcoin platforms. Following this notice, the SFC has taken action to restrict access to BitForex’s web links and social media channels.
The recent developments regarding BitForex coincide with investor reports of encountering difficulties accessing their funds during scheduled maintenance. Initial reports indicated significant outflows from BitForex’s hot wallets, surpassing $50 million. Consequently, withdrawals were halted, leaving investors unable to retrieve their cryptocurrency holdings.
BitForex has a history of negative attention and questionable practices. Last year, Japanese regulators flagged the exchange for operating without a valid license in the country. Additionally, crypto analytics firm Chainalysis previously accused BitForex of fabricating its Bitcoin trade volumes.
In a separate update, the SFC announced the conclusion of the registration period for crypto firms in Hong Kong. Earlier, the regulator established a deadline of February 29, 2024, for crypto exchanges to seek VATP licenses or cease operations in the country. Notably, popular exchanges such as Crypto.com, OKX, and Binance applied for licenses, with OSL and HashKey being the sole recipients thus far. Non-compliant firms and those with rejected applications are required to wind down and close by May 31, 2024.
During the shutdown phase, Hong Kong will impose restrictions on the operational and promotional activities of non-compliant firms. The SFC plans to publish a list of exiting firms and approved applications by June 1, 2024. Despite regulatory efforts, malicious actors persist in exploiting vulnerabilities in the system. The SFC recently blacklisted several websites impersonating MEXC and issued warnings against fake platforms masquerading as licensed exchanges in Hong Kong. These illicit websites aim to deceive investors with similar domain names and capitalize on the industry’s complexity.
By implementing stringent regulatory measures and enhancing transparency, the SFC seeks to safeguard investors and uphold trust in the crypto sector within Hong Kong.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
