HKCEx recently launched their online exchange and sent out a press release on 5/14/14 announcing $25 million USD in funding and deposit bonuses. This most recent press release was only published by one site: Technode. Technode has now deleted their original article (which is still available in cached form) and replaced the link claiming that HKCEx raised $25 million USD with one that reflects the fact (this article has now also been rescinded) that customers have been having issues and the site HKCEx.net had disappeared for several hours. Technode was also the only source to claim that HKCEx had successfully launched 10 Bitcoin ATMs in Hong Kong, beating Robocoin. It is now clear that everything HKCEx has ever told the press has been a lie. In contrast to Technode, it seems that all the Bitcoin news sites were holding off on backing the veracity of HKCEx’s recent claims. Unfortunately, the damage has already been done. Between the apparent backing of Technode and the promise of 108.8% instant returns, many digital currency enthusiasts were enticed to deposit funds into HKCex.net in the four days that it was in “operation.” However, they soon discovered that deposited funds were unrecoverable. For several hours between 5/18 – 5/19, HKCEx.net was offline without any explanation.
HKCEx claims a DDOS led to the temporary outage of their site. Since coming back online, still no users have received withdrawn funds.CCN never published any of HKCEx’s “press releases” because I was unable to verify any of their contents, ever. I have been in email contact with the supposed Marketing and PR head of HKCEx, and she has not provided any backing evidence. Instead, she has contradicted herself multiple times. (I refer to Lavin Lam as a female because of this Linkedin account.) Specifically, she told me that the Bitcoin ATM Network would not be up until the end of May.
HKCEx emerged from their DDOS with a new Technical Support hire: Orlando James. Emails sent by hkcex.net actually come from Yahoo in Singapore. HKCEx claims that the $25 million USD in investment was pledged funds to be spent on the exchange to buy cryptocurrencies. At the least, HKCEx has completely misrepresented themselves to the Bitcoin community. I will gladly edit this article should any new evidence come to light.
(5/19)Update 1: Lavin Lam says he is a man.
(5/19)Update 2: HKCEx’s fake Bitcoin ATM is a pretty version of this.
(5/21)Update 3: Emails sent by all of HKCEx’s supposed employees are redirected from firstname.lastname@example.org and are sent from a computer set to Singaporean Time. Victims have started to gather to fill this spreadsheet to provide an estimate of the damages caused by Technode and HKCEx.
[dropcap size=small]H[/dropcap]KCEx was supposed to be an exchange that allowed trading between fiat currencies and certain cryptocurrencies; specifically, Worldcoin, Bitcoin, Litecoin, Namecoin, Novacoin, and Peercoin. In the press release, Lavin Lam announced that HKCEx has raised $25 million USD from “private institutions.” She claimed that together with a reported $2 million USD investment from early 2014, HKCEx had raised $27 million and was poised to become a premier Bitcoin exchange. The most popularized portion of HKCEx’s press release was the fact that they would give 8.8% deposit bonus to all cryptocurrency deposits. People started to report that their bitcoins, litecoins, and worldcoins made it into the exchange and the deposit bonus was applied. However, there was not a single credible report of any sort of withdrawal going through. Instead, dozens of users have reported in several threads that they have never seen their withdrawals. Would-be HKCEx users have reported that both fiat withdrawals and cryptocurrency withdrawals are being rejected despite all information being entered correctly. HKCEx responded on Reddit and in email to the various cryptocurrency enthusiasts that had the misfortune to deposit funds into HKCEx. They reported that Lavin Lam had promised to release all withdrawals by the night of 5/16/14. Needless to say, this has not happened. Lavin Lam has now claimed that withdrawals will be sent out “by the end of the day.” At press time, it is past the “end of the day” in Hong Kong and still nobody has reported receiving a withdrawal.
Over the last few days, Lavin Lam has been busy patching the increasing number of holes in HKCEx’s story. As revealed on Bitcontalk.org, HKCEx claimed that they had just signed a deal with Hang Seng bank in Hong Kong to the tune of $9 million USD. Furthermore, they claimed that Hang Seng bank would be operating a trading bot on HKCEx.net by Monday 5/19/14. HKCEx’s exchange didn’t yet have the API functionality to support that yet… Also, Hang Seng Bank’s majority owner is the infamous HSBC, the epitome of everything that Bitcoin stands to destroy. Banks like HSBC, and by extension Hang Seng, are not interested in supporting Bitcoin. In HKCEx’s press release, they also claimed to be working with the number one insurance company in Hong Kong, AIA, to get insurance on Bitcoin deposits. AIA and Hang Seng Bank have not responded to CCN’s inquiries as to the veracity of these claims as of press time. HKCEx was also registered with Hong Kong’s Customs and Excise Department as a licensed MSO. Another HK Bitcoin Exchange, GBL, also flashed registration with HK authorities to lure investors in the past. HKCEx goes by MG Foreign Exchange Limited. However, MG’s registration with Hong Kong’s Company Registry reveals an address at 56 Belcher St. In contrast, their MSO license lists an address at the MG Tower on 133 Hoi Bun Rd. in Kowloon, HK.
HKCEx first popped up on people’s radar on 1/31/14 when their press release announcing the end of the initial $2 million USD round of funding was widely reported by the likes of Coindesk. When the South China Morning Post reached out to HKCEx to try and identify/verify the investors’ existence, HKCEx’s supposed CEO Pheng Cheah claimed that non-disclosure agreements prevented him from naming the investors. If you go to HKCEx’ s Crunchbase profile you’ll find find the investor of $25 million (not 27=2+25) is “Bitcoin.” If the first $2 million USD in investments couldn’t be verified… Then it might be fair to call the other $25 million USD into question as well. HKCEx’s management team consisted of a list of allstars with fancy European degrees. The entire team does not have any Social Media Profiles. In fact, the only person supposedly associated with HKCEx with a Linkedin profile is Lavin Lam. There is no proof that the Lavin Lam found on Linkedin is the Lavin Lam writing from email@example.com. Furthermore, in HKCEx’s team page, Lavin Lam is mysteriously missing. Purposefully excluding the Head of Marketing from the “official” website is a tactic often used by these large scale Bitcoin scammers. We saw it with LSM Labs and now we’ve seen it here. Also, the headshot provided for Director Peng Tsou, when reverse google image searched, shows that it might have been taken from a Singaporean website. Again, the fact that none of HKCEx’s supposed employees list any previous jobs should be a large warning sign.
As mentioned earlier in this article, Technode also incorrectly reported that HKCEx had successfully installed 10 Bitcoin ATMs in Hong Kong at key locations in malls. HKCEx provided Technode with these pictures, which were passed on to the public as real ATMs. Upon further investigation, it is clear that the pictures provided by HKCEx show the 3D-rendered model of the HKCEx Bitcoin ATM photoshopped into the image. HKCEx bought this ATM Kiosk design from cgtrader, rendered it all pretty, then “put them in malls.” Pictures of malls, that is. All this, only publicized by Technode, was engineered by HKCEx to explain the use of the first $2 million USD in investment from their 1/31/14 press release. The cgtrader design costs $49 but the man-hours and computer-hours needed to make it look like that might cost a few thousand more. Very simply, HKCEx would have you believe that they have set up ATMs months ago; however, HKCEx is not operating a line of Cryptocurrency ATMs in Hong Kong.
The Bitcoin community has recently exposed LSM Labs, and today the Bitcoin community has now exposed HKCEx.net. However, Bitcoin scams are still a dime a dozen. If you browse the Bitcoin Forum, you’ll be able to find blatant ponzi and pyramid schemes trying to attract investors. It is impossible to remove these types of scams from the internet. Eventually, Bitcoiners learn to ignore anything that seems “too good to be true.” This isn’t the first time that a Hong Kong Bitcoin Exchange, licensed with the proper HK authorities, has run off with money. Back in November of 2013, GBL vanished with $4.1 million USD of investors’ money. The group of Chinese responsible for this heist were caught by Chinese authorities, and could possibly face the death penalty. As HKCEx was officially registered with the Hong Kong authorities, it is likely that authorities will also catch the people behind HKCEx, the same way they did with GBL. China executes an estimated 4,000 people a year, white collar criminals that commit financial crimes are always included. It’s a sharp contrast to the Western justice system, that’s for sure.
Last modified (UTC): May 21, 2014 21:30