Hong Kong's Securities and Futures Commission (SFC) has flagged BitForex, a cryptocurrency exchange, for suspected fraud. The exchange abruptly went offline on February 23, with $57 million reportedly missing from its hot wallets.
BitForex's sudden disappearance prompted Hong Kong's regulator to add the company to its alert list regarding potential fraud associated with the exchange. The SFC announced its concerns, citing the exchange's lack of licensing or registration for operating a Virtual Asset Trading Platform (VATP) in Hong Kong.
Suspected Fraud and Regulatory Response
The SFC mentioned: "Alert List is a list of entities which have come to the attention of the SFC because they are unlicensed in Hong Kong and are believed to be, or to have been, targeting Hong Kong investors or claim to have an association with Hong Kong."
Recently, BitForex experienced significant disruptions when it abruptly went offline following the mysterious withdrawal of $57 million from its hot wallets, Finance Magnates reported. This situation, which emerged amidst growing concerns surrounding the exchange's operational status, has drawn comparisons to past regulatory warnings issued against similar platforms in Japan.
Efforts to access BitForex's official website have been futile, with users encountering messages such as "blocked access." This development followed previous warnings from Japanese regulators regarding BitForex's lack of proper registration and suspicions of inflated trading volumes reported by Chainalysis in 2019.
BitForex's Unregistered Operations
ZachXBT, a blockchain investigator, noted that three of BitForex's hot wallets experienced outflows totaling about $56.5 million before the exchange halted transactions. Users reported various issues, including blocked access to the company's website and difficulties accessing their accounts.
Despite ranking among the top global exchanges in September 2023, BitForex's current operational status remains uncertain, with CoinMarketCap no longer providing live data on the platform.
Following reports from victims unable to access their accounts and withdraw assets from BitForex due to the shutdown of its website, the SFC requested the Hong Kong Police Force to block access to the exchange's relevant website links and social media pages, according to a report by Coindesk.
Last year, the SFC partnered with the Hong Kong Police Force. This collaboration aimed to streamline the exchange of information about suspicious activities and breaches associated with VATPs.
One of the objectives of the working group is to implement a mechanism for assessing the risks posed by suspicious VATPs. This approach has been enabling authorities to promptly identify and mitigate potential issues, reducing the vulnerability of investors to fraudulent activities.
This article was written by Jared Kirui at www.financemagnates.com.
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