Justin Sun’s US fraud charges could hamper Huobi’s license application in Hong Kong
Justin Sun does not believe US fraud charges against him will affect Huobi Global’s license application in Hong Kong, Nikkei Asia report March 27th.
But a lawyer believes otherwise, telling the newspaper that the Hong Kong Securities and Futures Commission (SFC) would be hesitant to approve the license under the current circumstances.
Past allegations of wrongdoing lead to “extreme scrutiny,” according to the report, and progress is stymied as regulators turn every stone over before coming to a conclusion. I believe it will be significantly delayed.
On March 22, the US SEC disclosed fraud and unregistered securities allegations against Sun.
The fraud charges accused Sun and his wholly owned companies, including the TRON Foundation, of manipulating cryptocurrency trading activity on TRON and BitTorrent to make it look like active trading.
Additionally, the SEC considers TRON and BitTorrent cryptocurrencies to be securities issued without registration.
SEC Chairman Gary Gensler said in a statement:
“This case once again demonstrates the high risk investors face when cryptocurrency securities are offered and sold without proper disclosure.”
Several public figures were also involved in the prosecution against Sun for promoting the two cryptocurrencies without disclosing that they were paid to do so. Most have settled without admitting guilt.
Sun told Nikkei Asia that the accusations were “without merit” and would not affect Huobi’s business.
Hong Kong Becomes Crypto Hub
Hong Kong has recently pivoted to cryptocurrencies and taken a more positive stance toward the industry.
The city-state legalized retail trading of cryptocurrencies on June 1 and created a regulatory framework for the industry, including establishing a licensing regime for virtual asset service providers (VASPs).
As of March 20, more than 80 companies have expressed interest in applying for VASP licenses, and more than 20 companies, including Sun’s Huobi Exchange, have announced plans to establish a presence in Hong Kong.
Sun has announced that it will move Huobi Global’s headquarters to Hong Kong, advising the industry not to become too “US-centric”. Since then, he is confident his Huobi can secure his VASP license.
However, recent events may ruin his plans to set up shop in Hong Kong.