Pursuing Illicit Crypto Mining Operations Within Hong Kong Will Earn Miners A Major Fine, Jail Time
While much of the attention of regulatory measures for cryptocurrency around the world has to do with exchanges and the classification of coins, crypto mining has been working to find its place as well. In a new statement from the Financial Services of Hong Kong and the Treasury, new laws have been set in place to handle mining. The local trading laws cover mining operations for the most part, but the bigger issue comes down to fraudulent activities in the mining world.
A bill passed in 2012 called the Trade Descriptions Ordinance determined the penalties for unfair trading practices in the country. The bill stated that these types of trading practices would be subjected to a fine or imprisonment. Recently, officials have been working to determine if bitcoin mining is regulated under the same law, which it now will be.
Secretary James Lau responded to the inquiries, saying that the TDO covers the sale of any products related to virtual assets, which includes the sale of mining equipment. To this effect, the potential classification of “unfair practices” includes false trade descriptions, aggressive practices at the commercial level, accepting payment wrongly, and omitting certain information that could impact the choice of investors. Since these actions are covered under the law, there is a possibility of the activity seeing fines as high as $500,000 or prison time for up to 5 years.
In one fraud case already, the secretary says that the local police already arrested three individuals that are responsible for luring almost two dozen people to make investments in their equipment and services. The total amount invested from these contributors is over HK$3.7 million, which is approximately $471,400.
A criminal case involving Wong Ching-kit recently arose as well for HK$3 million ($383,000). The 25-year old, along with his 20-year old colleague, had been planning to defraud investors with the sale of mining machines but were unsuccessful. As a result, they were only charged with conspiracy.
Ching-kit was recently involved in a publicity stunt in December 2018, appearing in a video on Facebook that challenged the public, asking if they have seen money falling from the sky. In the video, bank notes start falling as about HK$6,000 ($764) was thrown from the top of a building nearby. He was subsequently arrested, based on suspicion of public disorderly conduct, but he got out quickly by making bail.