Hong Kong Police Probes Hounax For Alleged $15.4 Million Rug Pull
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Hong Kong Police Probes Hounax For Alleged $15.4 Million Rug Pull

Hong Kong police started investigating crypto trading platform Hounax on Saturday after receiving reports from 131 people who claimed they had lost HK$120 million (about $15.4 million) in an alleged scam.

South China Morning Post reported that the local police said on Saturday that they had launched an investigation into the alleged scam and vowed to make arrests soon. A 69-year-old retired woman reportedly lost HK$12 million to the scheme, among victims aged from 19 to 78, according to the report.

Chan Wai-kei, superintendent of the force’s commercial crime bureau, told local media that the scammer lured people into investing in crypto through the platform. When investors went to withdraw the money, “they were unable to do so.”

Earlier this month, Hong Kong’s Securities and Futures Commission listed Hounax as a suspicious virtual asset trading platform. 

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“The company claims to be a cryptocurrency trading platform which is in business cooperation with a financial institution and a venture capital firm when this is not in fact the case,” the SFC said on its website. 

“It appears to target Hong Kong investors with a pre-populated +852 field in its user log-in page and ‘Hounax Hong Kong’ social media channels on facebook, X (formerly Twitter), and YouTube,” the SFC added.

Hong Kong lawmaker Johnny Ng said on Monday in an interview that the SFC should play a more active role in contacting unlicensed crypto trading platforms to identify problematic firms earlier to prevent risks.

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.”

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.

Hong Kong Busted JPEX

The police force’s investigation into Hounax follows the authorities’ September probes into crypto trading platform JPEX.

As of Sunday, the police had received reports from 2,623 victims with about HK$1.6 billion involved in the case, according to a Hong Kong Economic Journal report. The police have so far arrested 66 people related to the case.

Earlier this month, Taiwan prosecutors also detained the chief partner of JPEX Taiwan and a lecturer on suspicion of violations of banking and anti-money laundering laws.

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