HKVAEX has withdrawn its application for a virtual asset service provider (VASP) license in Hong Kong. The move reflects increased regulatory scrutiny across countries that the crypto exchange has faced. In particular, the US Department of Justice recently accused HKVAEX of organizing a large criminal conspiracy: US authorities claim that the platform did not verify the identities of customers, did not comply with KYC (know your customer) rules and did not report suspicious activity.
HKVAEX leaves Hong Kong
The scrapping of Hong Kong’s licensing process hints at a broader recalibration of HKVAEX compliance efforts amid growing pressure from regulators. Industry insiders suggest the decision signals the exchange’s intention to rethink its approach to operations.
“Three independent sources confirmed that HKVAEX was considering ceasing operations and selling the exchange in 2023. HKVAEX was subject to criminal investigation by the US in 2023 and has also been the subject of numerous investigations in China,” said Chinese journalist Colin Wu.
Financial Impact of Regulatory Issues & CFTC Aggressive Enforcement
Moreover, the exchange’s strategic move appears to have been affected by new enforcement actions by US regulators. This suggests a potential revaluation of HKVAEX global operating position. In light of the legal problems, the expectation of a possible refusal from Hong Kong regulators may have played a role.
Commodity Futures Trading Commission (CFTC) Commissioner Caroline D. Pham weighed in on the lawsuits. In her statement, she highlighted the CFTC’s “aggressive enforcement stance” aimed at protecting U.S. investors. “The CFTC has filed another aggressive lawsuit, using our authority to prosecute alleged unregistered crypto asset derivatives trading platforms and other violations of the law. I commend the Enforcement Division for its vigilance in protecting our markets,” she commented.
Against the backdrop of negative news, the trading platform’s reserves in stablecoins of the ERC-20 standard decreased by more than 20% from $1.217 billion to $944 million.
This sharp drop reflects the immediate financial impact of the problems HKVAEX is facing. It also highlights the need for the exchange to carefully navigate the evolving regulatory environment.
