By CCN.com: Hong Kong’s Secretary for Financial Services and the Treasury, James Lau, has clarified to the city-state’s Legislative Council that commercial transactions relating to Bitcoin mining devices are protected under the Trade Descriptions Ordinance.
Consequently, bitcoin traders who engage in unfair trade practices with regards to bitcoin mining hardware face a five-year jail sentence. A maximum fine of 0.5 million Hong Kong dollars is also applicable.
Some of the unfair trade practices which were listed by Lau include 'false trade descriptions’ and ‘bait advertising’. Others include ‘misleading omission’, ‘aggressive commercial practices’, ‘bait-and-switch’ as well as ‘wrongly accepting payment’.
Lau’s clarification was in response to questions posed by Legislative Council member, Wu Chi-wai.
In his list of questions, Chi-wai referred to an incident where investors were fraudulently enticed into purchasing crypto mining equipment. While Lau might have had something else in mind, the HKD$3 million scandal involving crypto entrepreneur Wong Ching-kit springs to mind.
In January, South China Morning Post reported that Ching-kit had duped several Hongkongers into investing in his crypto mining machines. Per the victims, the hardware was supposedly designed to mine the filecoin cryptocurrency.
Among the claims Ching-kit made to entice them include stating that the investors would make a profit in three months. However, the cryptocurrency was not listed on any exchange at the time and the investors were unable to sell it. They were also promised refunds but this was not honored.
Around the same time, Ching-kit had hit headlines after tossing money from a Hong Kong building.
The plight of the investors was highlighted by Hong Kong’s Democratic Party. Chi-wai has been chairman of the party since 2016.
In his list of questions, Chi-wai also wondered whether the current cryptocurrency regulations needed to be beefed up. Lau quelled worries by stating that the regulators were alert and would introduce necessary regulations if and when deemed fit.
Just over five months ago, the Securities and Futures Commission (SFC) of Hong Kong unveiled new digital asset regulations. The regulations particularly targeted firms that manage portfolios investing or invested in bitcoin and other cryptocurrencies. This was with a view of protecting investors, the SFC CEO, Ashley Alder, indicated then:
The measures announced today allow us to regulate the management or distribution of virtual asset funds in one way or another so that investors’ interests would be protected either at the fund management level, at the distribution level, or both. We hope to encourage the responsible use of new technologies and also provide investors with more choices and better outcomes.