Our weekly roundup of East Asia news features a selection of the most important developments in the industry.

Another cryptocurrency scandal in Hong Kong

Scammers allegedly posed as investment experts and tricked 145 victims into injecting $18.9 million into Hounax, an unlicensed Hong Kong-based cryptocurrency exchange.

according to Report Earlier this week, police said ads allegedly promised investors annual returns of up to 40 percent with “no risk.” After users deposit funds, they cannot withdraw funds. On November 1, the Hong Kong Securities and Futures Exchange (SFC) listed Hounax on a suspicious cryptocurrency exchange billboard, but clarified that because Hounax had not yet obtained a license when the incident occurred, it had not been subject to enforcement actions by the regulatory agency.

This is the second scandal involving a Hong Kong cryptocurrency exchange in recent months. In September, another unlicensed exchange, JPEX, collapsed after allegations of a Ponzi scheme failed to surface, leading to the arrests of 66 people and an estimated $205 million in investor losses.

Despite the scandal, Hong Kong regulators appear firmly committed to transforming Hong Kong into a major Web3 hub. On November 27, Liang Fengyi, chief executive of the China Securities Regulatory Commission, explained that “even if the grace period ends tomorrow, fraud will still occur, so there is no intention to modify the grace period and other measures for the time being.”

Under current regulations, the grace period for cryptocurrency exchanges to operate without registration will end in June 2024. On November 30, the Securities and Futures Commission stated that it was seeking to legalize cryptocurrency exchanges. Initial Coin Offering Generate more revenue for the state budget.

Former advertisement for the closed Hounax exchange.
Former advertisement for the closed Hounax exchange. (Moderate)

In other Hong Kong crypto news, financial institutions Interactive Brokers and Victory Securities this week declare They have obtained a cryptocurrency license, with the former partnering with licensed cryptocurrency exchange OSL to immediately offer Bitcoin (BTC) and Ethereum (ETH) trading services to its Hong Kong customers.

On November 29, Darryl Chan, Vice President of the Hong Kong Monetary Authority, announced that multinational companies will work together to create a cross-chain bridge for China’s digital renminbi central bank digital currency (e-CNY CBDC). Dubbed “mBridge,” the protocol aims to reduce transaction fees and increase the speed of cross-border use of e-renminbi CBDC. The first pilot tests will begin in mainland China and Hong Kong.

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Foreign banks participate in e-RMB pilot

Standard Chartered Bank, HSBC, Hang Seng Bank and Taiwan’s Fubon Bank have begun testing digital yuan in cross-border transactions.

According to local news reports Report On November 28, four foreign banks will also integrate electronic RMB transfer services for customers to support customers in depositing and withdrawing electronic RMB. Personal bank accounts will also support official e-RMB applications and self-service wallets. Song Yuesheng, President and Vice Chairman of Hang Seng China, said:

“The central bank’s launch of digital RMB, a digital form of legal tender, is an important step for my country to explore the development of digital currency and promote the internationalization of RMB. Hang Seng China follows the national financial development policy advocacy and actively supports the application and development of the central bank’s digital currency.”

According to China Daily, in the first three quarters of 2023, the use of digital RMB transactions increased by 35% compared with the same period last year, reaching US$1.39 trillion. On November 29, the first RMB electronic student loan went online release In Suzhou Province, loans worth $26,230 were disbursed directly to the digital wallets of 13 recipients.

The list of banks supported by the e-CNY app includes Standard Chartered Bank, HSBC, Hang Seng Bank and Fubon Bank.  (Baidu)
The list of banks supported by the e-CNY app includes Standard Chartered Bank, HSBC, Hang Seng Bank and Fubon Bank. (Baidu)

HTX returns to normal

HTX exchange (formerly Huobi Global) has reopened deposits and withdrawals after suffering a devastating hot wallet hack on November 22 that cost the exchange $30 million.

According to reports on November 26 announcementthe exchange has since resumed deposits and withdrawals on Bitcoin, Ethereum, and Tron networks.

Huobi HTX once again promises to fully compensate for the losses caused by this attack and 100% guarantee the safety of user funds. The amount of funds Huobi HTX lost this time accounts for a very small amount of the total funds on the platform. ” the exchange said.

The company also announced a special airdrop in December aimed at rewarding its “loyal users.” According to reports, the airdrop tokens will come from “upcoming quality projects,” and the amount received will be determined based on users’ average net worth denominated in Tether (USDT) on the HTX exchange.

Justin Sun, actual owner of HTX exchange (Twitter)
Justin Sun, the actual owner of HTX exchange. Incredibly, Warren Buffett did not switch to cryptocurrencies after the meeting. (Twitter)

After the incident, Justin Sun, founder of the Tron ecosystem and actual owner of the HTX exchange, commented: “We will make up for the losses and all assets are safe.” However, despite the assurances, this is the past The fourth attack involving the HTX ecosystem in two months. Around the same time that the HTX vulnerability was exploited, the HTX Ecosystem Chain (HECO) bridge was hacked, resulting in $87 million in losses.

On November 10, Poloniex, an exchange acquired by Sun in 2018, was hacked due to suspected private key leaks, resulting in losses of US$100 million. The exchange resumed withdrawals on November 30. On September 25, HTX was robbed of $8 million due to a security incident. The exchange has since recovered $8 million in stolen funds and is offering a 250 Ethereum bounty to the hackers.

Zhiyuan Sun

Sun Zhiyuan is a reporter at Cointelegraph, focusing on technology-related news. He has many years of experience writing for major financial media including The Motley Fool, Nasdaq.com and Seeking Alpha.

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