The Securities and Futures Commission (SFC) of Hong Kong has issued a public warning about BitForex, a crypto exchange that is suspected of fraud and operating without a license.
The SFC has advised the public to exercise caution when dealing with BitForex, which claims to be based in Hong Kong but has not applied for a virtual asset trading platform (VATP) license from the regulator.
The SFC has also requested the Hong Kong Police Force to block access to BitForex’s website and social media channels.
According to the SFC, BitForex has been involved in suspected virtual asset fraud, as users have reported difficulties in withdrawing their funds from the platform.
BitForex has allegedly blamed the withdrawal issues on “wallet and website maintenance”, but users have been unable to access their accounts or funds since February 23, 2024.
On that date, BitForex’s hot wallets saw an outflow of about $57 million, raising suspicions of a rug pull.
BitForex has a history of controversy and dubious practices.
In 2023, the Japanese Financial Services Agency (FSA) warned the public that BitForex was operating an unlicensed crypto exchange in Japan In 2022.
The firm was accused by other crypto analytics firms, of inflating its trading volumes by using wash trading and other manipulative techniques.
The SFC’s warning on BitForex comes amid its efforts to regulate the crypto sector in Hong Kong and protect investors from potential scams and risks.
It has also established a licensing regime for VATPs, which requires crypto exchanges to comply with anti-money laundering, investor protection, and cybersecurity rules.
From recent publishing, it was identified that BitForex was among a list of suspicious VATPs that have not been licensed or applied for a license.
For now, investors to be vigilant and cautious when dealing with unregulated VATPs, as they may expose themselves to fraud, hacking, theft, or loss of their entire investment.
Investors may not be able to recover their losses or seek compensation from any investor protection scheme in Hong Kong if they trade on unregulated VATPs.
See also: Binance vs. the SEC: Clash of Jurisdiction and Overreach
