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Hong Kong's police force and the special administrative region's leading securities regulator, the Securities and Futures Commission (SFC) have established a joint task force to monitor suspicious activity on crypto exchanges.
A statement published by the SFC yesterday says the task force was established after a high-level meeting between the two authorities on September 28. Its main purpose is to enhance their collaboration in monitoring suspicious and illegal activities on Virtual Asset Trading Platforms (VATPs), or crypto exchanges.
The task force includes members of the police force's Commercial Crime, Cyber Security Financial Intelligence, and Investigations divisions, together with representatives from the SFC’s Enforcement and Intermediaries divisions.
The stated aim of the working group is to share information on suspicious and illegal exchange activities, develop a mechanism to assess the risk of suspicious exchanges and collaborate and integrate their agencies' activities in related investigations.
Hong Kong clamps down post-JPEX
Hong Kong's new task force comes as the city-state wrangles with the recent JPEX incident: a case of suspected fraud involving a Dubai-based crypto exchange operating in Hong Kong without licensing.
There are thought to be at least 2,305 victims of the incident, who collectively have been defrauded of HK$1.43 billion ($182.9 million), making JPEX one of the largest cases of financial fraud in Hong Kong history.
On September 25, Hong Kong’s Securities and Futures Commission (SFC) announced new measures to enhance transparency and security in the cryptocurrency space.
The measures include the publication of a comprehensive list containing licensed, deemed-licensed, closing down, and application-pending VATPs.
All this comes in wake of a sudden surge in cryptocurrencies in the city. According to a recent report by blockchain data platform Chainalysis, recent inflows to Hong Kong have rivaled that of mainland China over the past year, despite hosting only 0.5% of the latter’s population.
In 2021, China enacted a sweeping crackdown on crypto mining and trading activities within its borders, but Hong Kong's more welcoming stance may prompt mainland policymakers to adopt a softer stance, says Chainalysis.