HK Regulator Steps In To Stop Cryptocurrency Issue

The securities regulator has halted an initial cryptocurrency offering in the territory – the first such action by the local authorities – over concerns that the the e-coin issuer has engaged in unauthorised activities.

Black Cell Technology had promoted to sell digital tokens to investors through its website accessible by the Hong Kong public, with the pitch that the proceeds would be used to fund the development of a mobile application and holders of the tokens would be eligible to redeem equity shares of Black Cell.

But the Securities and Futures Commission (SFC) said the move constitutes a Collective Investment Scheme and the fund raising activity has not been approved by the commission.

It has halted the offering and the company agreed to return Hong Kong investors the relevant tokens. The company has also undertaken not to devise any similar fund raising without approval from the commission.

Last month, the Commission alerted investors to the potential risks of dealing with cryptocurrency exchanges and investing in initial coin offerings.

In September, it had sent letters to seven cryptocurrency exchanges, warning them that they should not trade cryptocurrencies which are "securities" as defined in the Securities and Futures Ordinance without a licence.