The Securities and Futures Commission (SFC) of Hong Kong has issued a cautionary advisory regarding the illicit operations of the cryptocurrency exchange MEXC. The exchange is reported to be non-compliant with the current regulations governing crypto activities in Hong Kong and operates without a valid license.
In a press release on Friday, the SFC highlighted that MEXC has been actively soliciting investors in Hong Kong, despite lacking the requisite license from the SFC or initiating the application process.
Under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, engaging in activities as a virtual asset service provider, including running a virtual asset exchange, in Hong Kong without the mandated license constitutes a criminal offense.
Additionally, the regulator emphasized that promoting such services to investors in Hong Kong without proper authorization is strictly prohibited.
SFC Adds MEXC to Alert List
In response to MEXC’s unauthorized operations, the SFC has taken action by including the platform and its website in the Suspicious Virtual Asset Trading Platforms Alert List.
The regulator emphasized the risks associated with trading virtual assets on an unregulated platform, highlighting potential consequences such as total loss of investment if the platform ceases operations, faces collapse, hacking incidents, or experiences misappropriation of assets.
The SFC reiterated its caution to investors against engaging in virtual asset trading on unregulated platforms, advising them to refer to its list of licensed virtual asset trading platforms to verify the licensing status of a platform.
It’s worth noting that MEXC has a history of regulatory issues. Last year in April, Japan’s Financial Services Agency disclosed that MEXC had been operating in the country without proper registration. Additionally, Germany’s Federal Financial Supervisory Authority flagged MEXC for unauthorized operation as recently as October.
This consumer alert follows another warning issued earlier in the week by the SFC regarding the crypto exchange Bybit.
Hong Kong Pushes for Crypto Regulations
Hong Kong is actively progressing towards establishing a comprehensive regulatory framework for the cryptocurrency industry.
In the previous year, the SFC commenced consultations on regulatory guidelines specifically tailored for the sector.
In March, the Virtual Asset Service Providers licensing regime was implemented in the city-state, mandating crypto exchanges to undergo registration with the regulatory authority.
As of February 29, the deadline for virtual asset trading platform (VATP) crypto license applications in Hong Kong lapsed, with a notable 24 applicants vying for licenses.
Prominent crypto exchanges with affiliations to mainland China or Hong Kong, including industry giants, have either directly applied for licenses or done so through their subsidiaries.
HBGL Hong Kong, an affiliate of HTX (formerly known as Huobi Global), submitted applications twice for its Huobi HK platform, while HKVAEX, an affiliate of Binance, applied in April.
OKX, another prominent exchange founded in China, submitted its application back in November to ensure compliance with Hong Kong’s crypto regulations.
Currently, OSL and HashKey are the only licensed exchanges serving retail investors.
Cryptocurrency exchanges that have not yet applied must exit the Hong Kong market by May 31st.
The Securities and Futures Commission (SFC) will announce approved and declined applications on a public register by June 1st, 2024.
Upon approval, virtual asset trading platforms can onboard new retail and institutional crypto investors and commence marketing in Hong Kong.
