Hong Kong’s Securities and Futures Commission (SFC) cautioned crypto traders about using cryptocurrency exchange Bybit on March 14, defining 11 Bybit products as suspicious investments while listing the exchange among unlicensed operators.
Hong Kong SFC’s Warning on Bybit
Bybit has come under the scrutiny of Hong Kong’s SFC in what seems to be the latest public warning and crackdown on unlicensed crypto trading platforms in the country, as revealed by a crypto reporter on X.
The Hong Kong SFC announced today that Bybit, the third largest offshore exchange, has been included in the warning list. Bybit’s Hong Kong entity is already applying for license, but its offshore entity is added to warning list, which is rare. https://t.co/byLw21hycS
— Wu Blockchain (@WuBlockchain) March 14, 2024
According to the SFC, since the exchange doesn’t have an operating license, Bybit has been added to SFC’s list of suspicious platforms.
Some of the products flagged by the SFC are leveraged tokens, options, futures contracts, and similar cryptocurrency services.
The commission has decried the lack of authorization for these products, maintaining that investors are susceptible to huge financial risks and potential losses.
The SFC has warned crypto traders of impending losses if unlicensed exchanges stop operations. It also highlighted the possibility of funds misappropriation by these suspicious platforms.
The commission, in its remarks, stated that it would probably be difficult to pursue legal action against organizations that are outside Hong Kong. As such, legal solutions might hit a brick wall.
The SFC stressed the need for investor prudence and reaffirmed its commitment to pursuing enforcement action against illegal activity.
Hong Kong SFC’s Regulatory Duties and Response
The clampdown on illegal entities and unlicensed crypto exchange platforms continues in Hong Kong. The SFC has made it clear they believe these organizations seek to exploit investors in the financial markets, especially those interested in crypto assets
Trading in crypto and other digital assets is considered a regulated activity in Hong Kong. Therefore, concerned businesses and organizations are mandated to obtain appropriate authorization and licenses from the SFC.
The SFC has continually appealed to investors and users to be careful, warning of the proliferation of unlicensed firms. For example, BitForex – a popular Virtual Asset Trading Platform (VATP), was also flagged by the commission.
The cryptocurrency community was deeply alarmed by the exchange’s abrupt disappearance on February 23. There were reports of losses of $57 million from its hot wallets.