Police probe HK crypto exchange after users lose $15M to scams

A Hong Kong Crypto exchange is being probed by police after users accused the platform of losing around HK$120 million ($15 million) in a series of Crypto scams.

According to the South China Morning Post, police began probing the Hounax exchange on Saturday and claimed arrests were coming. The Securities and Futures Commission (SFC) already listed the exchange as suspicious this month after it faked ties between a venture capital firm and a financial institution.

So far, 88 reports have been made from 131 alleged victims. 

According to the superintendent of Hong Kong’s Commercial Crime Bureau (CCB), “The scammer impersonated investment experts and lured people to invest in virtual currencies through a virtual asset trading platform with promises of high returns.”

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They invited victims to social media group chats dedicated to sharing “hot tips.” Here, victims were encouraged to deposit funds into a third-party investment app. However, police described the app’s investment figures as “meaningless numbers made up by the scammers to gain their trust.”

“In fact, the moment they transferred the funds to the third-party account, the money was transferred away,” the chief inspector of the CCB said. Some victims were forced to pay a “verification” fee that was as high as 80% of their original deposit if they wanted to withdraw, which of course they never could. 

Police said there has been a 105% increase in reported investment scams in the first nine months of this year when compared to last year, with over 4,300 reported scams and HK$2.8 billion ($360 million) in lost funds.

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