Report: Hong Kong exchange HKCex may be on the verge of collapse

Home » Report: Hong Kong exchange HKCex may be on the verge of collapse

fURk1IgIn May, Hong Kong-based cryptocurrency exchange HKCex announced it had secured $25 million in new funding, pushing it into the realm of high-profile venture-capital backed companies like BitPay, Circle and Coinbase. Almost immediately, however, many in the bitcoin community in Asia began to claim that the announcement was a fraud, and HKCex little more than a scam. Users claim they have been unable to withdraw funds since at least May 15th.

According to a crowdsourced spreadsheet from HKCex users, the likely situation appears to be that the company stole around $120,000 from users.

Writing for CoinDesk, Joon Ian Wong delves into the strange case of KHCex‘s boisterous claims and seemingly blatant fraud. Most notably, the exchange claimed to have gained $9 million in funding from Hang Seng Bank, Hong Kong’s second-largest bank. Not only did the claim not check out, a bank spokesperson told Wong: “Hang Seng Bank has no connections or banking relationships with Hong Kong Crypto Exchange (HKCEx).”

HKCex had created a seemingly perfect narrative for the bitcoin believers in Asia: Massive venture capital investment on par with the big U.S. startups; a planned network of 30 bitcoin ATMs in Hong Kong completed by the end of 2014; promotional bonuses and higher prices than other exchanges. Like many things that seem too good to be true, it wasn’t. Although the exchange hasn’t formally collapsed, it may soon be under official investigation by Hong Kong’s Commissioner of Customs and Excise due to apparent fraud on its Money Service Operators (MSO) license. A crowdsourced investigation by victims is also currently underway. HKCex’s website has been mostly down in recent weeks, although the company claims this is due to an ongoing DDoS attack which also prevents them from approving user withdrawals.

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