The Hong Kong Police recently launched an investigation into the Hounax scam. Numerous complaints have poured in, with victims reporting scams totaling US$15.4 million, according to a recent article in the South China Morning Post. Coinpri explains the essentials of the cryptocurrency exchange platform Hounax fraud!
Hounax scam, a well-orchestrated scam
According to a article from South China Morning Post published on November 27, the Hong Kong police have launched an investigation into Hounax after receiving multiple reports of scams totaling $15.4 million.
Victims explain that they were incited by Hounax to invest in cryptocurrencies. However, they were unable to withdraw their funds afterwards. Some of those defrauded also blame the authorities for not acting sooner.
The scam began on social networks. Using Facebook and WhatsApp accounts, the criminals offered prospective investors financial advice, particularly on equities, in order to gain their trust.
One of the complainants, called Ng, explained that he had lost HK$150,000 in this scheme. Before investing, however, he had thoroughly researched the Hounax platform. It was registered in Canada and was not on the list of sites reported for scams by the police in Hong Kong.
Hong Kong authorities warn too late
The warning from the Securities and Futures Commission (SFC) concerning Hounax finally fell on November 1st, even though many people had already placed funds on the fraudulent platform.
At the time, the regulator registered Hounax on its “alert list”, claiming that the platform falsely claimed to have business relationships with a financial institution and a venture capital firm.
Some Hong Kong legislators, including Johnny Ng Kit-chong and Doreen Kong Yuk-foon, criticized the CFS’s efforts to warn the public. In their view, the watchdog should have taken a more proactive approach to identifying such risks.
They also add that fraudsters are taking advantage of regulatory loopholes in the crypto industry. As these scams are not explicitly prohibited, they exist in a legal gray area.
Conclusion
This investigation into the Hounax scam follows on from the resounding JPEX platform scandal last September. According to the police, no fewer than 2,500 complaints were lodged in this case. The total value of the scam is estimated at around $193 million.
Would public institutions therefore do well to evolve their model for warning against scams by getting the public to contribute in a decentralized way? After all, isn’t web3 all about community?
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
