Hong Kong Sevens took on a different connotation from the rugby variety today when the Hong Kong Securities and Futures Commission (SFC) announced they were targeting seven ICOs and seven cryptocurrency exchanges.
The seven current initial coin offerings have been contacted directly by the authority which is demanding that they either confirm compliance with current regulations or immediately end their token sales to Hong Kong investors.
Regulators Move in After Complaints Filed
The move follows complaints against ICO token issues from investors who have alleged unlicensed or fraudulent activities.
Although stopping short of naming the ICOs, the SFC placed emphasis on rogue consultants who are advising projects on how to structure their offerings to appear as utility tokens rather than securities.
By doing so, the companies hope to fall outside of the Securities and Futures Ordinance (SFO) jurisdiction and therefore avoid any official scrutiny.
Mr Ashley Alder, the SFC’s Chief Executive Officer, said that “…we are also urging market professionals to do proper gatekeeping to prevent frauds or dubious fundraising and to assist us in ensuring compliance with the law.”
In addition to the ICOs, the Commission also sent letters to a further seven cryptocurrency exchanges that are either located in Hong Kong or accommodate trading in Hong Kong.
These documents are warning the exchanges that they should not deal in cryptocurrencies which qualify as securities as defined by the SFO unless they have been granted a specific licence to do so.
The clamp down comes after some investors filed complaints with the SFC that they had been unable to withdraw any assets from their exchange accounts. The exchanges have also not been named.