Hong Kong Investors Fall Victims to Alleged $15 Million Crypto Scam

Following the JPEX fiasco, it appears that another crypto trading platform called Hounax reportedly scammed some Hong Kong investors, causing them to lose over $15 million.

Meanwhile, some of the victims believe that the city-state regulator’s warning about the platform came after they already locked their money in Hounax.

Hounax Crypto Exchange Allegedly Disappears With Customer Funds

About 131 supposed investors between 19 and 78 years old fell victim to an alleged crypto scam by Hounax. According to a report by the South China Morning Post, the Hong Kong police received 88 complaints from the victims on Nov. 25, with the Securities and Futures Commission (SFC) getting 15 on Nov. 27 concerning Hounax.

While the loss is said to be around HK$120 million ($15.4 million), the victim with the supposed biggest loss, as stated in the report, is a 69-year-old retired woman who invested $HK12 million ($1.54 million) or 10% of the total funds.

According to one of the affected people surnamed Ng, the alleged scammers behind the cryptocurrency exchange built trust with the unsuspecting victims, and had accomplices who claimed (with demonstrations) that they could withdraw their money from the platform.

Ng and another investor surnamed Wong said they felt relaxed after realizing that Hounax was listed in Canada and the United States as a “money service business,” and they were able to withdraw their funds in September.

However, trouble started when investors realized that they couldn’t make withdrawals in November. The crypto platform had an investment deal that required investors to lock up their funds until Nov. 12. But the victims claimed that they could not withdraw their funds after the deadline, causing them to report the matter to the police.

SFC Warning Came Late, Laments Victims

The Hong Kong Securities and Futures Commission (SFC) on Nov. 1 included Hounax on its alert list as a “suspicious virtual asset trading platform.” According to the remark by the SFC:

“The company claims to be a cryptocurrency trading platform that is in business cooperation with a financial institution and a venture capital firm when this is not in fact the case. It appears to target Hong Kong investors with pre-populated +852 field in its user log-in page and “Hounax Hong Kong” social media channels on Facebook, X (formerly Twitter), and YouTube.”

But some of the people who put their money on Hounax lamented that the regulator’s warning was coming late after they already engaged with the firm and locked up their investments, as stated in the report.

Also, two Hong Kong lawmakers, Doreen Kong Yuk-foon and Johnny Ng Kit-chong, noted that the SFC’s public warning was not enough, with Ng stating that the warning could have come earlier.

The latest development comes shortly after the JPEX saga, with authorities receiving over 2,000 complaints from victims who claimed to have lost their funds to the company.

While several arrests have been made in Hong Kong, Taiwanese police also apprehended the chief JPEX partner in Taiwan following complaints from 10 customers.