Binance Associate HKVAEX Reportedly Ceases Operations

Key Takeaways

• Alleged Binance Associate HKVAEX has reportedly shut down operations.
• HKVAEX withdrew its application for a compliant cryptocurrency exchange license in Hong Kong on March 28.
• A report alleges that HKVAEX shared resources with Binance but what is their legal relationship?

Binance Affiliate BX SERVICES LIMITED unexpectedly withdrew its application for a cryptocurrency exchange license in Hong Kong. CCN found that the exchange may have shut down operations with a withdrawal deadline in April.

Binance Entity Withdraws License Application

BX SERVICES LIMITED, an alleged Binance entity in Hong Kong (SFC), withdrew its application for a crypto license for its HKVAEX exchange. While the reasons for the withdrawal were not specified, the reasons behind this decision remain unclear, the Securities and Futures Commission of Hong Kong website confirmed the withdrawal date as March 28.

Journalist Colin Wu notes that the possible reasons could be requests for changes in the audit company or the presence of insufficient application materials.

According to the SFC, the withdrawal of license applications can occur for various reasons, including incomplete applications or unresolved fundamental issues.

The withdrawal places HKVAEX among other applicants like BitHarbour, Meex, and HBGL who have withdrawn virtual asset trading platform licenses in 2024.

Exchange Shuts Down Operations

The shutdown deadline set by the SFC for businesses without a virtual asset trading platform operator license (VATP applicants) is May 31.

The exchange Telegram page noted in its last translated communication on March 29, “Our trading platform will be permanently closed. All users are advised to withdraw their assets before April 30, 2024. We apologize for any inconvenience and thank you for your prompt attention to this matter.”

While the exchange will reportedly cease withdrawals in April, Chen Wu co-founder and CEO of xWhale, a Hong Kong-based virtual exchange speaks about a ‘strange narrative.’

Chen underlines the public skepticism surrounding the relationship between Binance and HKVAEX despite no legal or equity ties between the two entities.

She also addresses a common narrative that Hong Kong regulators are out of touch with the cryptocurrency and web3 sectors.

In a translated statement, she notes, “From my personal experience, I found that the “officials” in the HK regulatory agencies are all quite smart and hardworking. It is not an exaggeration to say that they are immersed in the industry every day. They know which companies have a good reputation and which companies are doing tricks. Most importantly, they never mock the regulated companies for “knowing nothing”.”

HKVAEX-Binance Connection

According to a report  by the South China Morning Post, HKVAEX launched in February 2023 after being established in December 2022. It is alleged that HKVAEX was Binance’s effort to secure a domestic foothold in the Hong Kong crypto market.

But legally, they are known to be separate entities. However, the report alleges that HKVAEX shared resources with Binance, including the use of Binance servers for content fetching.

In response to SCMP inquiries, a Binance representative stated that HKVAEX is not part of the Binance Group of companies. It can be speculated that Binance wanted a compliant and separate exchange in Hong Kong to expand without facing legal challenges. But it turns out, the exchange might have already ceased to exist.

Hong Kong SFC Vigilant

The withdrawal of the virtual exchange application license by HKVAEX, an alleged Binance Hong Kong entity, notes that the SFC is serious about compliance.

While the specific reasons for the withdrawal remain unclear, public speculation has grown around the Binance-HKVAEX relationship. CCN finds that the exchange plans to cease operations and withdrawals in April, before the May 31 deadline.

About the Author

Shraddha Sharma

Shraddha has around five years of experience as a financial journalist, focusing largely on the Asian markets. Starting her career in Mumbai, India, as a news trainee and producer, she quickly found her niche in crypto. She is keen on learning how emerging technologies affect the broader markets and enjoys explaining complex financial ideas in a way that's easy to understand.

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