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Police in Hong Kong have begun investigating the crypto trading platform after more than 130 people said they had been scammed.
South China Morning Post reported on Saturday that Hong Kong authorities had vowed to make arrests soon in light of reports of over $15.4 million being stolen on Hounax.
Earlier this month, the Securities and Futures Commission had listed Hounax as a suspicious crypto trading platform after it was found to have lied about its ties with a financial institution and a venture capital firm.
“The scammer impersonated investment experts and lured people to invest in virtual currencies through a virtual asset trading platform with promises of high returns,” said Chan Wai-kei, superintendent of the force’s commercial crime bureau. “But when the investors went to withdraw the money, they were unable to do so.”
Chan said that the police had received 88 reports from 131 individuals who alleged losses totaling $15.4 million. The age range of the victims was from 19 to 78, with the largest reported loss of $1.54 million belonging to a 69-year-old retired woman.
The platform, which claimed to be Singaporean-ran, had commenced operations earlier this year and seemed to focus on Hong Kong investors, according to Chan. However, he clarified that the police did not uncover any connections between Hounax and the JPEX crypto exchange scandal, which impacted over 2,500 individuals and resulted in losses exceeding $192 million.
Chief Inspector Or Wing-yan disclosed that the alleged Hounax scammers engaged individuals via social media and WhatsApp, luring them into group chats with “hot tips.” Victims were then prompted to download the company app through a hyperlink and transfer funds to a third-party account to boost their investment account.
Despite initially witnessing apparent returns, victims soon discovered that these gains were fictitious, and their transferred funds had been moved elsewhere.
“In the beginning, the victims would see quick returns in the investment account, but those were just meaningless numbers made up by the scammers to gain their trust,” Or said. “In fact, the moment they transferred the funds to the third-party account, the money was transferred away.
Withdrawal attempts were met with rejection or demands for an “verification” fee, reaching up to 80% of the initial funds, under the guise of complying with international anti-money laundering regulations.
Even after victims paid the fee, they found themselves unable to retrieve their money, as the “investment managers” vanished and victims were ousted from the group chats. None of the victims ever encountered the scammers in person, complicating the investigation.
Chan noted that arrests were imminent, and the police had requested telecom companies and social media platforms to block the website and associated accounts.
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