Hong Kong Regulator Flags BitForex For Suspected 'Fraud'

Hong Kong's securities and futures regulator on Monday warned markets and users against cryptocurrency exchange BitForex after it went offline late last month following reported withdrawals of $57 million from hot wallets.

The Securities and Futures Commission (SFC) of Hong Kong on Monday added BitForex to its Alert List of "suspicious virtual asset trading platforms," listing down the exchange's various websites and social media accounts.

"The entity, purporting to be a virtual asset trading platform ... and purportedly headquartered in Hong Kong, is suspected of engaging in fraudulent activities. The website of the entity has been shut down and investors are prevented from accessing their own accounts and withdrawing assets held with the entity," the SFC noted in its warning.

The SFC notes that its Alert List includes entities that are operating without a license in Hong Kong and are "believed to be, or to have been, targeting Hong Kong investors or claim to have an association with Hong Kong."

SFC also urged people engaging in virtual assets to provide information of their dealings if an unlicensed firm contacts them. An online complaint form is available for individuals who may have had encounters with unlicensed entities.

This is not the first time BitForex was flagged by a regulator as Japan's Financial Services Agency (FSA) earlier last year warned that BitForex was operating without proper certification in the country.

BitForex went dark late last month following what prominent blockchain researcher ZachXBT said was "suspicious activity" around the crypto exchange. ZachXBT noted that BitForex's hot wallets "saw outflows of ~ $56.5M" before the exchange stopped processing withdrawals "with no official announcements having been made since."

As of writing, the BitForex website remains down, displaying the following message: "Sorry you have been blocked. You are unable to access bitforex.com."

DL News correspondent Callan Quinn has since reported that her search for BitForex's office led to "an empty office in a strip mall." The exchange's registered office is in Kwai Fong, area of north Hong Kong's New Territories, which Quinn said is "mainly a residential area."

She pointed out that crypto firms claiming to have teams across the world, including in Malaysia, Estonia and Seychelles, would have a sizeable office, but Quinn's search for BitForex's physical address led to an address, which is used by multiple companies.

Another supposed BitForex office address "did not seem to exist," while another was an address where an employee "said that their company offered virtual addresses."