Cryptocurrency Crimes in Hong Kong Almost Tripled Over the Last 3 Years

Over the past three years, the incidences of virtual asset-related crimes in Hong Kong have significantly increased. The cases reported amounted to 1,397, 2,336, and 3,415, involving HKD 824 million, HKD 1.704 billion, and HKD 4.398 billion, respectively, nearly tripling during this period.

Law enforcement has gathered specific statistics for individual cases per the report regarding arrests and legal proceedings. For example, in the JPEX case, as of February 20, 70 individuals had been apprehended, with no formal charges filed against them yet.

Hong Kong’s Lists Suspicious Trading Platforms

According to a statement by Christopher Hui, the Secretary for Financial Services and the Treasury of Hong Kong, in response to a query from a legislator, the Securities and Futures Commission (SFC) has intensified its information disclosure efforts since September last year.

The efforts include publishing extensive information regarding virtual asset trading platforms, such as a “list of suspicious virtual asset trading platforms,” to provide transparent and timely information to the public. As of February 14, this list contained 14 trading platforms.

The SFC and the Police had exchanged intelligence concerning over 100 virtual asset trading platforms or related activities as of February 2. The determination regarding whether to initiate a special investigation into individual trading platforms and activities is based on various criteria, including their connection to Hong Kong, potential violations of relevant laws, and the scale of people and funds involved.

Meanwhile, the JPEX case was major in Hong Kong last year. Following a liquidity crisis, the exchange ceased operations, bringing about a thorough investigation by the SFC. Thousands of customer complaints came in, and the loss surpassed $152 million. So far, 8 suspects have been detained, and authorities have frozen about $1.9 million in their accounts and confiscated property valued at $5.6 million.

Hong Kong Cracks Down on Crypto Service Providers

The Treasury Department initiated a public consultation on February 8 regarding the legislative proposal for licensing virtual asset trading service providers to enhance the regulatory framework further. The consultation period will last until April 12.

In collaboration with the Hong Kong Monetary Authority, the Treasury Department commenced a public consultation in December 2023 concerning the regulation of stablecoin issuers, which concluded on February 29.

Depending on the outcomes of these consultations and the advancement of preparatory work, the government aims to swiftly submit a draft regulation pertaining to the licensing regime to the Legislative Council.

Meanwhile, HTX, previously known as Huobi, recently applied to provide cryptocurrency services in Hong Kong, joining a growing list of applicants. This move follows closely after Bybit, another cryptocurrency exchange, also filed for licensing approval from the SFC to operate within the region.