The Hong Kong Police have initiated an inquiry into Hounax, a cryptocurrency trading platform, following numerous complaints totaling $15.4 million in reported scams, the South China Morning Post reported on Nov. 27.

Victims claimed they were enticed to invest in crypto on the platform but faced difficulties withdrawing funds. Some victims have blamed the authorities for their losses.

One victim, Ng, who lost around HK$150,000 to the scam, explained how the scammers built users’ trust by providing financial advice on stocks through Meta-owned social media platforms Facebook and WhatsApp.

Ng claimed to have conducted thorough due diligence on the platform and found it listed in a Canadian business registry. Additionally, a search on the Hong Kong police CyberDefender website, known for flagging online scams, yielded no results for the platform.

Thus, the Hong Kong authorities’ Nov. 1 warning about the platform came a little too late as people already had their money invested in the platform.

The Hong Kong Securities and Futures Commission (SFC) flagged Hounax as a suspicious entity, listing it on its “alert list” earlier in the month. At the time, SFC stated that the exchange falsely claimed business connections with a financial institution and a venture capital firm.

Lawmakers slam SFC

Hong Kong lawmakers Johnny Ng Kit-chong and  Doreen Kong Yuk-foon criticized the SFC’s effort to warn the public.

According to the lawmakers, the financial watchdog should take a more proactive approach to identifying such risks. They added that the fraudsters also appear to be capitalizing on the loopholes in the existing regulations within the industry as they “were not banned and existed in a legal grey zone.”

Meanwhile, this investigation follows an earlier inquiry into the JPEX scandal that emerged in September. CryptoSlate reported that the police received more than 2500 complaints, and around $193 million was allegedly lost to these scammers.