Several Hong Kong residents lost a total of nearly HK$120 million (US$15.4 million) in an alleged cryptocurrency investment scam, according to police reports. Many affected say warnings about the suspicious trading platform came too late, according to the South Morning China Post.
The Securities and Futures Commission (SFC) added Hounax to its list of suspicious virtual asset sites on November 1. However, by that time, investors’ money was already tied up in the scam through months of carefully orchestrated trust-building.
Losses Total in the Millions
- Police have received 88 reports from 131 victims claiming losses close to HK$120 million
- A retired 69 year old woman reportedly lost HK$12 million, the biggest reported individual loss
- The ages of known victims range between 19 and 78 years old
Maintenance worker Ng, 50, said he first connected with the scammers in April via Facebook. Posing as financial experts in a WhatsApp group, they built trust over months before recommending the Hounax platform in August. Ng invested HK$150,000 but only discovered the scam when trying to withdraw funds on November 14.
Accountant Wong, in his 40s, tells a similar story. After following a YouTube channel posting bogus financial tips in June, she joined a fraudulent WhatsApp group. Small cash prizes for answering group quizzes convinced her to open a Hounax account. Though suspicious of some platform details, two successful withdrawals built trust. She lost HK$100,000.
Months of Meticulous Scamming
Victims say the months-long scam was sophisticated. Accomplices in WhatsApp groups pretended to successfully withdraw money, suggesting legitimacy. Positive online searches also lowered investors’ guards; Hounax was registered in Canada and didn’t appear on HK police scam warnings.
Lawmaker Doreen Kong Yuk-foon slammed the SFC’s passive approach, given the legal loopholes allowing unlicensed platforms to operate. Other lawmakers also criticized delayed public warnings about Hounax. They highlighted that developed economies shouldn’t enable large-scale scams.
The Hong Kong police said investors were drawn in over the past few months with quick but meaningless returns. When victims sought to withdraw funds later, excuses were used to reject requests or charge verification fees of up to 80 percent.
The platform claimed to be run by a Singaporean company but specifically targeted Hong Kong investors. The police are continuing investigations into the meticulously planned scam. Losses could total even higher, given that more victims may lodge reports.
Regulator Warnings Too Late
The SFC only added Hounax to its public list of suspicious platforms on November 1, likely after receiving some initial complaints. But for investors already scammed out of millions in funds, the warning came too late.
By September, money was locked up by the fraudsters, barring withdrawals until November 12—over a week after the SFC advisory. This trap prevented victims from cutting losses earlier. Investor sentiment is that regulatory action should have come sooner.
The scam highlights the risks of putting money into unregulated cryptocurrency platforms promising high returns.
Such sites fall outside of the licenses needed for authorized trading exchanges with investor safeguards. The victims admitted letting their guard down after months of building trust and perceived legitimacy.
Hong Kong’s lawmakers have called for closing legal loopholes that allow unlicensed firms and scams to persist, enabled by advanced technologies like encrypted messaging and decentralized digital coins.
For now, investors should exercise extreme caution when assessing the allure of dubious platforms with unclear oversight. As the Hounax case shows, months of legitimacy building could simply mask fraudsters waiting to strike.