Hong Kong’s Securities and Futures Commission today issued a warning that Binance — the world’s largest cryptocurrency exchange by trading volume — was not allowed to conduct “regulated activity” in the city, specifically trading in stock tokens.

Fast facts

  • In its statement, the SFC said it was aware that Binance was offering stock tokens in several countries, and warned that stock tokens “likely to be ‘securities'” under the Securities and Futures Ordinance were subject to its regulatory oversight.
  • “The SFC wishes to make it clear that no entity in the Binance group is licensed or registered to conduct “regulated activity” in Hong Kong,” its statement said.
  • “The SFC does not tolerate any violations of the securities laws and will not hesitate to take enforcement action against unlicensed platform operators where appropriate,” said Thomas Atkinson, the SFC’s executive director of enforcement. “Investors should be wary of the risks of trading virtual assets on an unregulated platform.  If the platform ceases operation, collapses, or is hacked, investors may face the possible risk of losing their entire investments held on the platform.”
  • The SFC also said it had received complaints from investors over withdrawals of fiat currencies and virtual assets from their accounts on unregulated platforms. “Investors are further reminded that if such platforms do not have a nexus with Hong Kong, the SFC may not have jurisdiction over them.  In case of disputes, seeking recourse is likely to be difficult and legal remedies may be unavailable.”
  • In response to a request for comment, a Binance spokesperson told Forkast.News: “Binance does not currently hold exchange operations in Hong Kong. We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion. We don’t comment on specific matters or inquiries.”
  • The SFC’s warning comes as Binance announced today that it was “winding down support for stock tokens on Binance.com to shift our commercial focus to other product offerings. Effective immediately, stock tokens are unavailable for purchase on Binance.com, and Binance.com will no longer support any stock tokens after 2021-10-14 19:55 (UTC).”
  • Binance stock tokens in companies such as Tesla, Coinbase and Apple have drawn regulatory scrutiny over whether they violated securities laws, specifically due to the way in which they have been marketed.
  • The cryptocurrency exchange has been in authorities’ crosshairs recently, with warnings issued by regulators around the world, including in the Cayman Islands, Germany, Italy, Japan, Thailand, the United Kingdom and the United States.

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