Following the collapse of JPEX in September, another virtual asset platform, HOUNAX, was investigated for suspected fraud.
It is understood that HOUNAX started operations at the beginning of this year. Its website uses traditional Chinese, and the user login page has a preset area code of +852. It targets Hong Kong customers and uses high returns as bait to attract investors through a virtual asset trading platform. In the end, investors cannot get back even their principal and interest.
Event Details
The Chief Executive Officer of the Hong Kong Securities and Futures Commission (SFC), Leung Fung-yee, said that the SFC began to receive the first complaint about HOUNAX at the end of September, and the number of complaints received continued to increase in October.
On November 1, HOUNAX was included in the warning list of "suspicious virtual asset trading platforms" by the Hong Kong Securities and Futures Commission, which is intended to alert investors to risks. After the police began their work, the SFC reiterated its position on protecting investors and said that it would quickly launch enforcement actions, information disclosure, investor education and other protection measures.
It is reported that the company claims to be a cryptocurrency trading platform and has business cooperation with a financial institution and a venture capital firm, but this is not the case and it seems to target Hong Kong investors.
Moreover, in the HOUNAX promotional materials that are still available online, the platform claims that it was "founded by industry leaders and the original Coinbase technical team, registered in Melbourne, Australia, and has established operating branches in Singapore, Australia and other countries, and has MSB compliance licenses in the United States and Canada." Judging from the current results, this is obviously false propaganda.
On November 27, the Hong Kong police reported that 131 investors were victimized during the investigation, with losses exceeding HK$110 million. On November 29, the Hong Kong police reported again that 158 Hong Kong investors were lured into investing by the unlicensed platform HOUNAX, with losses of approximately HK$155 million (RMB137 million). This shows that the number of victims of HOUNAX fraud has shown an increasing trend in the two disclosures by the Hong Kong police.
It was found that HOUNAX's so-called investment managers attracted users through WhatsApp groups. The platform once attracted users to invest in crypto assets within the platform with a high return of 40%. However, when users tried to withdraw funds, the other party would refuse or charge a verification fee of up to 80%, until eventually they could no longer withdraw funds and the platform could not be opened.
Impact and Response
The SFC said that after receiving the complaint, they began an investigation and shared intelligence with the police. The Hong Kong police revealed that throughout the incident, the so-called investment managers or customer service of HOUNAX would eventually disappear without a trace, investors were kicked out of the group, and the platform completely ran away.
Currently, the known victims are aged between 19 and 78, and the amount of losses suffered by the victims ranges from HK$12,000 to more than HK$10 million. A 69-year-old retired woman lost HK$12 million, becoming the biggest individual loser in this case.
After the HOUNAX case, the SFC reiterated that it has a "zero tolerance" policy for all illegal virtual asset platforms and will quickly introduce measures to protect investors, including law enforcement, information distribution and investor education. Due to the seriousness of the incident, on November 28, Hong Kong Chief Executive John Lee also responded to the suspected fraud of HOUNAX, saying that the Hong Kong government's supervision is very important to protect the interests of investors and crack down on unlicensed platforms.
At the same time, the SFC is also stepping up the review of applicants for VASP (virtual asset trading) licenses. At present, the SFC has included 8 platforms or companies including OKX, BGE, HKbitEX, HKVAX, VDX, Meex, PantherTrade and VAEX in the "Virtual Asset Trading Platform Applicant List". The purpose of setting up this list is to allow the public to understand whether the virtual asset trading platform has applied for a license from the SFC, so as to identify whether the virtual asset trading platform has made untrue or misleading misrepresentations.
Summarize
The suspected fraud incident of HOUNAX virtual asset platform has attracted great attention from Hong Kong regulators and prompted them to strengthen supervision and protection measures for virtual asset trading platforms. Investors should remain vigilant, carefully choose compliant and trustworthy platforms for investment, and always pay attention to investment risks. Regulators will continue to work hard to ensure market transparency and investor interest protection to maintain a healthy virtual asset market environment.
