SFC to name all crypto license applicants

The Securities and Futures Commission has bowed to public pressure and revealed the names of firms that have applied to offer trading in virtual assets to mom-and-pop investors.

Additionally, it will also reveal the names of suspicious platforms amid growing investor outrage over the JPEX scandal.

The U-turn came barely a week after the regulator said it would be "inappropriate" to release the names of platforms that are applying for retail licenses as it might lead investors to think they are trustworthy and regulated.

It also came amid accusations that the SFC had acted too late over JP-EX Crypto Asset Platform - or JPEX - which has allegedly defrauded thousands of investors to the tune of more than HK$1.4 billion.

The SFC said it will educate investors to improve awareness of virtual asset fraud in response to concerns about transparency of information.

Chief executive Julia Leung Fung-yee said the SFC will publish a comprehensive list of virtual asset entities online, including licensed, deemed-licensed, closing down, and application-pending virtual asset trading platforms or VATPs.

Additionally, it will provide more timely information to notify investors, with the aim of ensuring "transparent and clear information dissemination."

The list of applicants for virtual asset trading platforms currently includes four firms: HKBitEx, Victory, HKVAX and Hong Kong BGE.

HKBitEX was founded in 2019 by Gao Han, who previously served as the head of China clients and marketing services at Hong Kong Exchanges and Clearing, where he was involved in initiatives such as Stock Connect and Bond Connect.

Victory's investors include the well-established local brokerage Victory Securities and Hong Kong Securities Association chairman Katerine Kou is one of its directors.

HKVAX, established in 2019, announced last month it had received a "principles of approval" notice from the SFC but has not yet obtained an official license.

Hong Kong BGE was established in 2021 and is wholly owned by the Hong Kong-listed HKE Holdings.

Lawmaker Johnny Ng Kit-chong noted that as of Saturday police had received complaints from 2,305 investors involving a total of HK$1.43 billion and the ramifications were extensive.

He said the SFC's warning about JPEX came too late and did not reduce investor losses.

Christopher Wilson, executive director overseeing the enforcement division at the SFC, said the regulator noticed in early 2022 that JPEX's website and advertisements contained suspected false statements, and it had given the platform an opportunity to address these concerns.

However, the platform's evasiveness led to the SFC including it on its list of unlicensed companies and suspicious websites in July that year. In April this year, the SFC received complaints about asset withdrawal issues from JPEX, and noticed aggressive marketing and suspicious products.

Subsequently, it launched an investigation and on September 13 issued a warning about the platform and referred the case to law enforcement, Wilson said.

The investigation is under way, he added.

Meanwhile, the Legislative Council's chairman of the panel on financial affairs Jeffrey Lam Kin-fung described the SFC move as "belated" but said it would enhance transparency and investor confidence.

himo.liu@singtaonewscorp.com