Hong Kong Securities Watchdog Warns that Many ICOs May Be Frauds

April 16

In a speech on new technologies on Friday, Hong Kong Securities and Futures Commission (SFC) deputy chief Julia Leung reiterated previous concerns of risks associated with ICOs.  She acknowledged that innovative technologies such as blockchain have the potential to improve efficiency and financial inclusion, but warned “that does not entitle anyone to conduct fundraising from the public in violation of securities law.”  More frankly, she noted that ICOs:

[A]re dubious, if not downright frauds.  The issuers escape the scrutiny of the police or securities regulators because of their crossborder nature and the way the crypto assets are structured to fall outside any regulator’s perimeter.

This follows an SFC statement in February revealing that it had sent letters to seven unnamed cryptocurrency exchanges operating in or in connection with Hong Kong, warning them not to trade cryptocurrencies deemed as ‘securities’ under law, without a license.

David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. He is currently the Chairman of the Litigation Department of the firm’s New York office. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. Since 2008, David has been included in Chambers for his expertise in international arbitration.