Hong Kong may further empower regulators to tackle cryptocurrency scams, John Lee says, after watchdog unable to close Hounax platform

Police on Monday said 145 residents claimed to have lost about HK$148 million after being asked to invest on cryptocurrency platform Hounax, following an investigation that began on Saturday.

Lawmakers slammed legal loopholes that prevented the SFC from taking enforcement action on unlicensed platforms, and accused the regulator of taking too long to warn the public.

The SFC dismissed suggestions that the latest incident reflected “significant shortcomings” in its monitoring work, noting it also needed time to investigate.

“The platform is unregulated and not licensed with the SFC,” a spokesman for the regulator said. “As such, the SFC does not have the power to cease its operation.”

Lee said the public should only trade on licensed platforms, and authorities must deliver information in a fast and transparent manner. Investor education also needed to be strengthened, he added.

“I want to emphasise that we should use all the methods available to protect the interests of investors, as well as combat any platforms or websites that are unlicensed, illegal or have scam elements,” he said.

Hounax platform allegedly scams 131 Hongkongers out of nearly HK$120 million

The latest case follows the scandal centred on the JPEX cryptocurrency exchange, involving more than 2,500 alleged victims and over HK$1.5 billion in losses.

The scandal, which erupted in September, is the single largest financial fraud case in the city’s history, exposing flaws in the regulatory regime amid a push to transform Hong Kong into a virtual asset hub.

Police said they did find any links between the alleged scam involving Hounax and the JPEX case. Hounax, which started operating this year and appeared to target local investors, claimed it was run by a Singaporean company.