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 HKD ($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 Regulatory Commission (SFC) said that as of the 27th, they 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 in line with legal financial institutions, although on Nov. 1 the SFC listed it as a suspicious platform and cautioned users over its risks.

Hounax allegedly recruited local customers via claims it was founded by the original Coinbase technical team, 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 this year. Local authorities received more than 2,000 complaints from JPEX users and eventually reported around $180 million in losses. Sixty-six individuals have been arrested in relation to the scandal so far.

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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