Cryptocurrency Scam Costs Hongkongers HK$120 Million: Late Warning Criticized

Cryptocurrency Scam Costs Hongkongers HK$120 Million: Late Warning Criticized

Over 130 residents of Hong Kong have fallen prey to a cryptocurrency scam involving the Hounax platform, with total losses amounting to approximately HK$120 million (US$15.4 million). Victims and lawmakers have criticized the Securities and Futures Commission (SFC) for issuing a late warning, as many had already invested in the platform.

Details of the Scam

The scam, involving Hounax and another platform, saw a significant amount of money drained from users. A 69-year-old woman reportedly faced the largest individual loss of HK$12 million. The SFC added Hounax to its list of suspicious virtual asset trading platforms only on November 1, which many victims argue was too late.

Victims’ Experiences

One victim, a 50-year-old maintenance worker surnamed Ng, lost HK$150,000 to the scam. He was deceived by scammers posing as “financial experts” on social media. By August, these fake experts had persuaded members of their WhatsApp group to start trading on Hounax. Ng noted that the SFC’s warning came after many users’ funds were already locked in by an investment deal.

Another victim, an accountant surnamed Wong, lost about HK$100,000. She was initially lured in by a YouTube channel offering financial advice and later joined a WhatsApp group linked to the channel. She was convinced to set up a Hounax account after winning prize money in quizzes shared in the group.

Lawmakers’ Response

Lawmakers have called for closing legal loopholes that limit the SFC’s ability to respond to unlicensed platforms operating in a legal grey area. They criticized the SFC for its passive approach and stressed the need for more proactive measures to protect investors from such scams.

Police Investigation and Public Warning

Police revealed they had received 88 reports from 131 people who said they had been defrauded. The force stated that scammers provided quick returns on initial investments to build trust but later transferred the deposited money. Victims attempting to withdraw funds were either rejected or charged exorbitant “verification” fees.

Growing Concerns Over Cryptocurrency Scams

This incident underscores the increasing sophistication and meticulous planning behind cryptocurrency scams, highlighting the need for greater vigilance and regulatory oversight in the digital asset space, especially in well-developed societies like Hong Kong.

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