Several ICOs Might Be Frauds, Says Hong Kong Securities Watchdog

Hong Kong’s securities regulator has taken a skeptical tone on investments linked to original coin offerings (ICOs).

In a speech at an investment decision sector perform on Friday, Julia Leung, deputy head of the Hong Kong Securities and Futures Fee (SFC) at the time more cautioned the general public above fundraising things to do connected with the know-how.

“Whilst we admit that revolutionary systems this kind of as blockchain have the opportunity to make improvements to performance and money inclusion, that does not entitle anyone to carry out fundraising from the general public in violation of securities regulation,” Leung explained.

She further more raised issues that, although disguised as blockchain know-how, quite a few ICO projects might not be truly presenting technological innovation and pose hazards for traders.

Leung stated:

“Further complicating issues, quite a few of these fundraising (things to do) are dubious, if not downright frauds. The issuers escape the scrutiny of the police or securities regulators because of their cross-border nature and the way the crypto belongings are structured to fall outside the house any regulator’s perimeter.”

The reviews occur just weeks right after it halted an ICO task it deemed was presenting unregistered securities in Hong Kong. Earlier the SFC has requested quite a few exchanges to delist tokens derived from ICOs that have been also regarded by the company as securities.

As component of its attempts above the know-how, the SFC is also relocating to educate the general public about the perceived hazards of investments in cryptocurrencies.

In January, the SFC and a further company introduced a media marketing campaign throughout the city’s subway method in an exertion to dampen the escalating buzz above ICO investments.

In Friday’s speech, Leung attributed the attractiveness of this kind of investments to a gambling attitude, indicating: “Several millennials who subscribe to digital tokens in ICOs comprehend that there is no intrinsic price in the tokens but are betting on the immediate rise of the token price in the secondary market place.”

Leung image courtesy of the SFC

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