SFC slammed for 'passive role' on combating latest Hounax crypto platform fraud

Lawmakers slammed the Securities and Futures Commission (SFC) for inaction and tardiness in blocking the fraudulent cryptocurrency trading platform Hounax, which saw 131 victims lose up to HK$120 million.

On a radio program today, lawmaker Doreen Kong Yuk-foon stated that the SFC has named numerous companies on its list of "unlicensed companies and suspicious websites," with HOUNAX being placed on the list as early as November 1.

However, HOUNAX's website was still operating despite being deemed a dubious virtual asset trading platform, which resulted in 131 victims being scammed and the largest single loss is up to HK$12 million.

Kong criticized the "passive role" of SFC over the incident and added that it was akin to telling the public to "ask for your own blessings" if the watchdog has no legal authority to ban the fraudulent crypto trading platform.

She worried other fraudsters would take advantage of the virtual asset trading platform licensing system's cooling-off period to scam public investors.

Kong stated that other nations and regions would swiftly stop comparable scam websites, while local law enforcement is too late to act.

"It is like the authority did not take intruders' weapons and let them continue breaking into the house and plundering," Kong said, describing SFC's actions.

She asked the SFC to increase social network patrols and alert the public in advance when they come across dubious websites.

In the same radio interview, the legislator and the convener of the "anti-fraud coalition" Johnny Ng Kit-chong stated that the HOUNAX case highlighted the need for tighter oversight of social media marketing.

"It is recommended that the SFC collaborate with law enforcement agencies to disclose any suspected investment platforms promptly," said Ng.

The coalition has received at least five requests for assistance. Among them, the victim made a nearly HK$1 million deposit into his now-frozen account.

Ng also urged the public to exercise caution when selecting official investment platforms to prevent falling for scams.

Separately, the SFC said that it has received 15 complaints regarding the suspected scam.

The watchdog said it lacked the authority to stop the platform's operations and that the concerned platform was not subject to SFC regulation or licensing.

Through the previously established process, the authorities have shared intelligence with law enforcement agencies regarding the HOUNAX incident, and the inquiry is still ongoing.

Police have requested social media platforms to shut down pages related to Hounax and asked telecommunications service providers to block all access to Hounax's websites. They said they will mount an arrest operation after further intelligence analysis and investigation.

It was learned that victims were usually rejected by the platform's agents using different excuses whenever they wished to withdraw money from their accounts, or they would be asked to pay expensive service fees.