Hong Kong has clarified that it considers the sale and conduct of digital assets and cryptocurrency mining to be subject to its local Trade Descriptions Ordinance (TDO), which regulates against unfair trade practices.
The Secretary for its Financial Services and the Treasury Bureau (FSTB), James Lau, made this clear in a written response to Hong Kong’s Legislative Council (Legco) on April 3. Legco had asked for information about risks associated with crypto and related activity such as mining.
TDO was passed in 2012 and regulates in particular instances of mis-selling and misrepresentation of goods. Penalties under it include fines of HKD 500,000 (USD 63,700) and 5 years imprisonment if convicted.
Lau in his written reply to Legco stated that the sale of mining equipment and digital assets is covered by TDO. Unfair trade here includes false trade descriptions, false marks and misstatements, and false, misleading or incomplete information on goods provided.
He cited a recent crypto fraud case as an example – that of Hong Kong’s 25-year-old Bitcoin millionaire Wong Ching-kit, who is also known as “Coin Young Master”. Both Wong and a 20-year-old colleague were arrested last month for allegedly defrauding more than 16 complainants of over HKD 3 million (USD 382,300) in bogus sales of crypto mining machines.
Investors claimed Wong had misled them into buying the equipment for a digital token called “filecoin”. However, the coin turned out to not be tradeable and promises to investors for refunds were supposedly never honored.
Wong is also widely believed to be behind a high-profile publicity stunt in Hong Kong last December when HKD 100 banknotes were thrown from a building in the poorest district of Sham Shui Po, causing a public frenzy. Before the notes were thrown, Wong was seen in a video asking passers-by if they believed money will fall from the sky.
Suspected of disorderly conduct, Wong was arrested by later released on bail.