BitForex, another cryptocurrency exchange vanishes, leaving Hong Kong’s investors in limbo

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5th March 2024 – (Hong Kong) BitForex, a cryptocurrency exchange, has seemingly evaporated into thin air. This disappearance coincides with a notable Bitcoin rally, yet finds Hong Kong investors stranded, unable to access their funds to the tune of nearly $57 million.

This latest fiasco adds to the growing list of crypto calamities in Hong Kong, which has seen an alarming frequency of exchange disappearances. The surge in Bitcoin’s value has only exacerbated the situation, leading to fears of an increase in fraudulent activities within the crypto space.

Despite the vigilance of Hong Kong’s Securities & Futures Commission (SFC), BitForex managed to operate under the radar, not appearing on the SFC’s compilation of 14 suspect platforms. With claims of a user base in the millions and an employee count in the hundreds, BitForex presented itself as a significant player in the market.

In pursuit of BitForex’s physical location, the trail led to the unassuming Kwai Fong, a residential district far from the financial epicentres where one might expect a crypto exchange to be based. The addresses associated with BitForex were part of industrial areas, offering little in terms of substantive business operations.

One such address in Tai Lin Pai Industrial Area was found to be a purveyor of virtual office services, predominantly catering to mainland Chinese businesses venturing into Hong Kong. With thousands of companies listed at this address, it provided no tangible evidence of BitForex’s presence.

The search continued to Mong Kok, a bustling tourist area lined with markets and shops. Here, an office purportedly belonging to BitForex was situated above a strip mall, currently unoccupied. Local businesses did not recognize BitForex or its CEO, Jason Luo, whose January resignation appears not to have materialized, as he remains the sole shareholder and director.

The mystery deepened when an address supposed to house BitForex between apartments D/2 and D/5 did not physically exist, a common practice in Hong Kong where numbers associated with bad luck are often omitted.

The SFC has now issued a warning against BitForex, placing it on its Alert List as a suspicious virtual asset trading platform. As the entity’s website has gone offline, investors have been left without recourse to retrieve their assets.

This is not BitForex’s first brush with regulatory scrutiny; Japan’s Financial Services Agency had previously warned that BitForex was operating without proper certification.

The vanishing of BitForex, amid claims of an international presence, underscores the volatility and regulatory uncertainty plaguing the crypto industry in Hong Kong. The city’s increasing number of crypto exchange failures poses serious questions about the efficacy of current regulations and the safety of investors’ assets.