Hong Kong’s financial watchdog secretary states that illicit crypto mining operations are subject to local trading law.
The secretary of Hong Kong’s Financial Services and the Treasury has stated that crypto mining operations are regulated by local trading law. His written response to Hong Kong’s Legislative Council was published on Wednesday, April 3.
The Council has solicited information about the risks and fraudulent activities related to cryptocurrencies and underlying activity, such as mining. Moreover, the officials are interested whether mining is regulated under the Trade Descriptions Ordinance (TDO) — a bill passed in 2012 that prescribes penalties for unfair trading practices in Hong Kong.
Secretary James Lau has responded that the sale of mining equipment and any other products related to virtual assets falls under the TDO. The unfair practices he mentions in this regard include false trade descriptions, misleading omissions, aggressive commercial practices and wrongly accepting payment, among others.
According to Lau, illicit mining activity can thus be subject to a $500,000 fine or five years in prison.
The secretary also mentions a particular fraud case, when Hong Kong police arrested three persons that allegedly lured 20 victims into investing over HK$3.7 million (around $471,400) in crypto-related equipment and services.
As Cointelegraph previously reported, a similar amount of funds — HK$3 million ($383,000) — was mentioned in a criminal case involving a purported Bitcoin millionaire (BTC) Wong Ching-kit. The 25-year-old businessman and his 20-year-old-colleague were arrested at their office in Hong Kong for conspiracy to defraud 20 investors by selling them mining machines.
Wong Ching-kit is wide known for a publicity stunt in Hong Kong’s relatively poor district Sham Shui Po in December 2018. The entrepreneur appeared in a video posted on his firm Epoch’s Facebook page, asking whether anyone believed that money could fall from the sky. Immediately after his question, stacks of bank notes reportedly amounting to HK$6,000 ($764) were thrown from a nearby rooftop. Following an incident, Wong was arrested on suspicion of disorderly conduct in public, but later released on bail.