Police in Hong Kong revealed Sunday that an estimated 148 million Hong Kong dollars ($18.9 million) were stolen from victims of a crypto scam orchestrated by the unlicensed exchange Hounax.
Authorities said they received 145 reports of losses from the Hounax platform as of November 27. The individual claims range from 12,000 HKD to 10 million HKD ($1,539 to $1.2 million). That is according to the Hong Kong Securities and Futures Commission (SFC).
During a press conference last week, local police issued an initial warning about Hounax after receiving multiple fraud complaints. Earlier this month, the SFC also categorized Hounax as a “high-risk” crypto platform and advised investors to exercise caution.
Hong Kong investigators allege Hounax utilized false claims
However, investigators allege Hounax utilized false claims of legitimacy to continue soliciting customers in Hong Kong. According to authorities, the exchange deceived victims by stating it cooperated with licensed financial institutions, was founded by the original Coinbase technical team, and held a Canadian regulatory license.
Police officials said Hounax also tapped into social media channels to recruit local investors by promoting non-existent venture capital backing from firms such as Sequoia Capital and IDG Capital.
The chief inspector of the Commercial Crime Investigation Section stated that more arrests will be made as the probe continues. Nine suspicious crypto platforms are on the SFC’s warning list, including the recently added Hounax.
The latest crypto scam echoes a larger controversy earlier this year involving the Hong Kong exchange JPEX. This controversy resulted in over $180 million in reported losses and 66 arrests so far.
For victims of the Hounax scam seeking information or help with recovery efforts, police advise contacting the Commercial Crime Investigation Section. As the regulatory response evolves, cryptocurrency investors in Hong Kong continue to face a climate of uncertainty and potential peril.