According to reports, a Hong Kong cryptocurrency exchange has had its funds frozen
Customers of a Hong Kong-based cryptocurrency exchange claim they are unable to withdraw funds
or tokens from the exchange, and at least seven have reported the issue to police.
According to a review of messages on Coinsuper's official Telegram chat,
dozens of clients have been unable to make withdrawals from the company since late November.
Five customers told Bloomberg News that they had filed police reports after their withdrawals
were apparently frozen, leaving them unable to retrieve approximately $55,000 in tokens and cash.
The uproar over Coinsuper, which is backed by Pantera Capital,
may fuel calls for more regulatory oversight in Hong Kong.
In November 2020, the city's securities watchdog announced that it would propose a licensing regime
for all crypto-trading platforms, a strategy that rival financial hub Singapore is also pursuing.
Calls and messages seeking comment from Coinsuper executives went unanswered. In response to a
Bloomberg enquiry about the Coinsuper complaints, a Hong Kong police spokesperson said via email
that the department is looking into one case in which a person who purchased cryptocurrency "via
an investment company" has been unable to withdraw her funds since December.
The administrator of Coinsuper's Telegram chat
stopped responding to questions about failed withdrawals in late November,
then reappeared this week to ask affected users to provide their email addresses.
In interviews, some clients stated that there was no follow-up,
and the administrator did not respond to messages from Bloomberg.
VOLUME DROP
Terry Chan, a financial industry worker in the city,
began using the platform in November 2020 because it was "quite large in Hong Kong" at the time.
In early December, he attempted to withdraw US$4,000 from the exchange
after noticing that trading was becoming less liquid. On January 5,
he and two other Coinsuper customers filed a group complaint with Hong Kong police.
According to crypto data firm Nomics, Coinsuper's trading app is still
operational, and the exchange handled around US$18.5 million in volume on Friday
(January 7) - down from a daily peak of US$1.3 billion in late 2019.
According to Nomics data, Binance, the largest cryptocurrency exchange,
handled approximately US$51 billion in transactions during the same time period.
For crypto exchanges, Hong Kong has a "opt-in" regulatory regime, which means they can apply to
be regulated. However, strict regulations make that route "not very appealing" for platforms,
according to Joshua Chu, a consultant at ONC Lawyers in Hong Kong.
According to Chu, the city will most likely abandon the opt-in model later this year.
He went on to say that problems with crypto exchanges, such as long withdrawal times,
are "not uncommon," and that regulation may be required for technical issues.
RESIGNATION OF EMPLOYEES
According to Chinese media reports, Chinese tycoon Zhang Zhenxin,
who died in 2019, founded Coinsuper in 2017.
Karen Chen, who became CEO of Coinsuper in early 2018 after working as a senior executive at UBS
Group, stated in an interview that she will leave the company in July 2019 for personal reasons.
Chen stated that she is still a minority investor in the company as a result of shares
she received while working there, but she has no involvement in its operations.
According to a filing with the companies registry, she resigned as a director of
Coinsuper in March 2020. Chen was named as Coinsuper's largest individual shareholder
in the company's most recent annual report, which was filed with the companies registry in October.
She last mentioned Coinsuper on Twitter in November of 2019.
According to a press release that did not specify the amount raised, the company completed its most
recent funding round in early 2019. A partner at one of Coinsuper's venture capital backers,
who requested anonymity, said his firm has written off its entire roughly US$1 million investment.
According to the source, the firm lost contact with Coinsuper's management
about 6 to 8 months ago, and Chen stopped responding on WeChat. According to data from
Hong Kong's Companies Registry, several employees left the company between July and December.
Pantera Capital, led by veteran Bitcoin investor Dan Morehead, did not respond to
requests for comment. Coinsuper was a part of the firm's June 2018 Series A funding round.
Pantera's website continues to list the crypto exchange as one of its investments.
Coinsuper's last major announcement was on Twitter in September of last year,
when it announced the addition of the Solana token and the Tether stablecoin to the exchange.
Since December 1, its social media accounts have been inactive.
We hope you enjoyed watching and listening to this video,
Please let us know your opinion in the comments area below.
If you found our content useful, please like it and share it with your friends.
Also don't forget to subscribe to our channel and
hit the notification bell for more crypto related contents...