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Hong Kong's Securities and Futures Commission has warned against two crypto trading platforms, "CBEX Group" and "Bitget Pro," over suspected fraudulent activities, just as the market sees a surge amid FTX bankruptcy claims.
Hong Kong's SFC Issues Alert on Crypto Platforms Amid Increasing Scam Reports and Tightened Regulations
The SFC took action after many users reported withdrawal issues. According to the announcement (via CoinGape), both companies may have fooled users with bogus withdrawal records.
“The Securities and Futures Commission (SFC) today warns the public of entities operating under the names of “CBEX Group” and “Bitget Pro” for suspected virtual asset-related fraudulent activities (Notes 1 and 2).”
The Hong Kong Financial Authority added both firms to the SFC's alert list and advised users to be cautious. In recent years, Hong Kong authorities have increased measures to prevent people from pretending to be victims of unscrupulous actors. Scammers might deceive customers by setting up bogus websites resembling trading platforms.
The SFC recommended that the Hong Kong police restrict the flagged websites and issue additional warnings to users about fraudulent operations in its jurisdiction.
“Online investment scams may involve any type of assets and are perpetrated through multiple channels, and investors can suffer substantial losses. Therefore, investors should stay vigilant and beware of fraud when making investment decisions.”
The fall of FTX in 2022 marked a watershed moment in crypto legislation, as most countries issued new standards for crypto businesses. Hong Kong has continuously issued guidelines and held discussions with relevant players in the sector.
While investor protection remains a priority, the country aims to promote the web3 landscape as a leader in related technology. This combination of rules has drawn cryptocurrency firms to the industry. This week, the country's Securities Association suggested that cryptocurrency enterprises exercise self-governance.
According to the statement, it will stimulate sector development as firms respond to specific concerns similar to those in other regions.
FTX Bankruptcy Claims Yield High Profits Amid Legal Challenges and Market Volatility
FTX's bankruptcy collapsed the cryptocurrency market, but some hedge and investment funds profited handsomely off FTX claims. A London firm that trades distressed assets is making a record 200% profit on FTX claims, but the largest transaction has met a stumbling block, prompting legal action.
As FTX bankruptcy lawyers estimate a 100% return on money frozen during the FTX collapse and cryptocurrency values surge, companies like London-based Attestor Ltd are buying whatever they can to increase profits. According to Claims Market, Attestor holds the greatest FTX claim.
In 2023, Attestor signed a deal to purchase claims from Lemma Technologies, one of the largest FTX claim accounts, for $58 million. The value of claims is likely to exceed $165 million, or over 200% of the sale price. However, buying claims is riskier than purchasing failed bonds or loans.
Lemma Technologies, owned by a South Korean dealer, has decided to keep the claim for itself as its value climbs amid a soaring cryptocurrency market. On March 18, Bloomberg reported that the attestor's lawyers filed a lawsuit in New York court alleging "seller's remorse."
Lemma Technologies has not submitted a defense to Attestor's New York lawsuit. Meanwhile, Lemma's major investor, Junho Bang, is facing charges in South Korea, adding to the drama and confusion.
In February, South Korean authorities charged Junho Bang with stealing digital assets from Haru Invest. They also detained three executives at yield platform Haru Invest for stealing 1.1 trillion won ($828 million) in cryptocurrency. Before suspending withdrawals in June, ailing firm Haru Invest advertised up to 50% yields.
Haru Invest named Junho Bang as the majority shareholder of B&S, a cryptocurrency trading firm that invested in tokens like FTX's FTT Token. Junho Bang transferred his FTX claim to Lemma in January 2023, according to court documents obtained by Bloomberg News.
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