According to the territory’s governor, John Lee, the freezing of cash on the Hong Kong-based cryptocurrency exchange JPEX demonstrates the need for stringent crypto licensing regulations.Six persons, including two social media influencers, were detained by Hong Kong police after more than a thousand complaints totaling $128 million were made regarding the trade, the South China Morning Post said on Monday.
“This incident highlights the importance that when investors want to invest in virtual assets, then they must invest on platforms that are licensed” and regulated by the Hong Kong Securities and Futures Commission (SFC), Lee said according to remarks published on his website. “We will be doing more public education for investors to know the risks.”
The SFC said that JPEX was operating without a license, and the cryptocurrency exchange claimed that the SFC’s “unfair” treatment of it by the authorities could damage Hong Kong’s plans to develop into a Web3 hub.
Companies like Ripple have compared Hong Kong’s system favorably to places like the U.S. that don’t give the same regulatory certainty, despite some being concerned about a tighter control that may potentially be imposed by crypto-skeptic Beijing.