On March 4, Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), issued a public notice about the cryptocurrency exchange BitForex over alleged fraudulent dealings.
BitForex, although based in Hong Kong, does not possess the license required by the country’s regulatory framework for digital asset operators. This advisory is part of the SFC’s commitment to providing sanity and regulatory compliance in the crypto sector.
Unregistered and Unavailable
The SFC’s notice warned the public of suspected virtual asset fraud involving BitForex.
BitForex has not been licensed by the SFC or applied for a license to operate a virtual asset trading platform (VATP) in Hong Kong. The regulator has advised investors to exercise caution when dealing with unregistered Bitcoin platforms.
Subsequently, the SFC has asked law enforcement officials to block access to the exchange’s web links and social media pages.
This development follows reports from investors who couldn’t access their funds on BitForex during scheduled maintenance.
Initial reports implied that BitForex’s hot wallets experienced outflows of over $50 million, leading to the suspension of withdrawals and leaving investors unable to access their cryptocurrency funds.
BitForex has always been in the news for the wrong reasons.
Seeing some suspicious activity with the crypto exchange @bitforexcom.
On Feb 23 their hot wallets saw outflows of ~$56.5M. Shortly after this time withdrawals stopped processing with no official announcements having been made since.
Currently users are asking questions on… pic.twitter.com/gFEcwExHKh
— ZachXBT (@zachxbt) February 26, 2024
Last year, Japanese regulators flagged the exchange for operating an unlicensed exchange in the country. Before that, crypto analytics firm Chainalysis accused the exchange of inflating its Bitcoin trade volumes.
Registration Phase Ends for Crypto Firms in HK
Last week, the SFC announced it had closed its license application process for exchanges in Hong Kong.
The financial regulator had initially set a deadline of February 29, 2024, for crypto firms to either apply for a virtual asset trading platform (VATP) license or exit the country.
Over 15 exchanges, such as Crypto.com, OKX, and Binance, applied for licenses. However, only OSL and HashKey have received their VATP licenses.
Subsequently, all non-compliant businesses and those with rejected applications must wind down and close by May 31, 2024.
HK will limit these noncompliant firms’ operational and marketing activities during the shutdown period. The regulator also plans to release a list of firms exiting the country and those whose applications were approved by June 1, 2024.
Despite its intentions, bad actors continue to look for loopholes to game the system. Last month, the SFC blacklisted several web platforms impersonating MEXC.
Recently, the agency issued a warning against multiple fake websites impersonating two licensed exchanges in the country.
The cybercriminals created suspicious-looking websites with domain names similar to the OSL and HaskKey Exchange. The regulator added these suspicious websites, designed to deceive and fleece investors with similar domain names, to its official crypto alert lists.
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