Hong Kong Blocks Fake Cryptocurrency Exchange Websites

Hong Kong Blocks Fake Cryptocurrency Exchange Websites

A blockchain security analytics firm Hacken has indicated that detecting fake crypto trading platforms is not an easy task. Bartosz Barwikowski, layer-1 security expert at Hacken noted that for new investors confirming the authenticity of a trading site is not always a simple and easy task. He further retained that investors may face more issues when accessing a website for the first time.

The Securities and Futures Commission (SFC) of Hong Kong has decided to identify fake investment sites and add them to the blacklist. The SFC officials have retained that their analysts are working on rooting out impersonating local crypto exchanges and imposing a restriction on them.

SFC issued an official warning on 4th March with the identification of various suspicious sites impersonating two regulated trading platforms.

The perpetrators involved in the illegal activities utilized various fake domains and impersonated two licensed exchanges in Hong Kong namely OSL Digital Securities and Hash Blockchain Limited. On this account, SFC blockchain 6 websites including hskexpro.com, hskexs.com, oslexu.com, hskex.com, and oslint.com. The security measures were followed by difficulty in fund withdrawal, fee inflation, and surge in withdrawal.

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Hong Kong Police to Take Action Against Impersonators

SFC officials alerted the Police Force of Hong Kong to take steps and block access to impersonating or fake websites. SFC is also listing all these impersonating sites on its official page. Among other impersonating crypto exchanges, the agency has listed various sites that looked like MEXC.

On 9th February, SFC added 8 domains for impersonating MEXC. At the same time, the agency has directed investors to verify trading platforms via public registry of individuals and institutions.

To facilitate the investors, SFC is also issuing a list of licensed virtual asset trading platforms with relevant information on regulated exchanges and official sites. Regulators have directed the investors to refrain from making transactions or sending money before confirming the counterparty identification. Barwikowski noted that it is a simple step to verify authenticity of a website on SEC but less than 1% of investors will comply.

He retained that users should rely on trustworthy third-party services instead of relying on search engines or social media platforms. It is because scammers may upload spiked links or make fake accounts to trick unsuspecting investors.

The cybersecurity expert further stated issued two recommendations to avoid fake sites. He advised using application rather than website since they are harder to fake and have customer comments and review checks before listing. The second solution was to use third-party authentication sites.

License Applications for Crypto Exchanges

SFC organized a licensing application round for crypto exchanges on 20th February. The platforms who have refrained from submitting an application for registration are asked to leave within 3 months. The Crypto Council for Innovation (CCI) recently submitted a comment at the stablecoin regulatory authority in Hong Kong. The advocacy group submitted a five-page document containing criticism regarding reserve and operational requirements.

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At the same time, the document made a case for algorithmic stablecoins that the Hong Kong Monetary Authority, Financial Services, and Treasury Bureau (FSTB) do not approve of. These agencies issued a consultation paper on 27th December. This regulatory framework shared plans for stablecoins and set having an office in the region with senior management presence.

Another requirement was setting minimum reserve requirements to par value at least. CCI has highlighted issues with the regulatory requirements noting that these reserve requirements can increase pressure if they are replicated in other nations. CCI noted that the international nature of various crypto service providers ensures that there should be in-person senior management.

Risk-Based Approach

CCI suggested a risk-based approach regarding reserve requirements and talked about equalizing framework. As per this policy, the issuers will be able to immolate stablecoins in Japan. Japan recognizes licenses issued from other nations after a review process. The document also noted that algorithmic stablecoins do not fulfill the reserve requirements like Fiat-referenced stablecoins to qualify for a license.

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

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