Hong Kong authorities reported on Nov. 27 that 145 users were affected in a scam by the unlicensed cryptocurrency exchange Hounax, resulting in a loss of 148 million Hong Kong dollars ($18.9 million), according to local media Shenzhen Commercial News. 

On Nov. 25, local police held an initial press conference to inform the Hounax platform of the reports. The Hong Kong Securities and Futures Commission (SFC) said that as of Nov. 27, it received 18 complaints about exchange regarding amounts ranging from 12,000 HKD to 10 million HDK ($1,539– $1.2 million).

According to local police, Hounax claimed to be a licensed platform that cooperated with legal financial institutions. On Nov. 1, the SFC listed it as a suspicious platform and cautioned users about its risks.

Hounax allegedly recruited local customers via claims the original Coinbase technical team founded it, it had a license from Canadian authorities, and it was considering investments from big names like Sequoia Capital and IDG Capital.

The chief inspector of the Commercial Crime Investigation Section of the Hong Kong Police, Ke Yongn, said the platform also utilized social media to attract victims. However, according to the report, the official Facebook page of the platform is no longer online.

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The SFC currently lists nine suspicious crypto investment platforms, including Hounax, JPEX, Hong Kong Digital Research Institute, BitCuped, FUBT, futubit/futu-pro, EFSPD, OSL trading and arrano.network.

This incident follows a major scandal with the JPEX exchange in Hong Kong earlier in 2023. Local authorities received over 2,000 complaints from JPEX users and eventually reported around $180 million in losses. So far, 66 individuals have been arrested in the scandal.

These events have caused local regulators in Hong Kong to tighten crypto regulation to avoid another industry catastrophe. However, regulators have said the country’s one-year grace period for crypto exchanges won’t change.

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