Hong Kong, as the world's leading place in accelerating the embrace of Web3 changes, requires that operating virtual asset service businesses in Hong Kong require a license from June this year. The swarming Web3 startups, cryptocurrency exchanges waiting for opportunities, and industry practitioners eager to try out all make this financial capital bustling with activity. However, with the recent occurrence of industry risk incidents such as the JPEX fraud case, everyone is gradually shifting the discussion topic from the development opportunities that Web3 brings to Hong Kong to its associated challenges.
With Web3 as the next generation of Internet innovation technology, how can ordinary investors protect the safety of their assets? How should trading institutions build security?
On October 28, at the "LinkWeb 3.0 Security Salon" hosted by Ouke Cloud Chain and FT Chinese Network, Jiang Qian, a partner at Ashurst Law Firm, gave advice on how investors can protect their personal interests from the perspective of investors. At the same time, Bi Lianghuan, chief researcher of Ouke Cloud Chain, also analyzed the overall situation of the current large-scale adoption of Web3, and proposed that there are gaps between supervision, financial institutions and VATP, and between on-chain and off-chain transactions. Compliance technology can help solve such gaps. To solve the problem, Bi Lianghuan took OKLink product application as an example and provided safety and compliance technology solutions to the industry.
How can investors protect their wallets?
Jiang Qian is a partner of Ashurst Law Firm, a well-known law firm in Hong Kong, and is also the victim's attorney in the JPEX fraud case. He is not only very familiar with Hong Kong's legal environment, but also has a deep understanding of the JPEX case.
Jiang Qian pointed out that in the face of security issues in virtual asset transactions, the Securities and Futures Commission of Hong Kong issued a warning statement on September 13. In the statement, the Securities and Futures Commission also warned ordinary investors to pay special attention and be careful about those "unbelievably high prices". "Profitable" investment and trading opportunities, especially investment projects promoted by some social media or Internet celebrities. These trading platforms do not have a license from the China Securities Regulatory Commission, and their promotion is not true investment experience and opinions.
What should victims do if they encounter a fraud case on a virtual asset trading platform? Jiang Qian believes that there are three ways:
First of all, the victim should immediately report the crime to the police to facilitate the investigation, and at the same time file a complaint with the relevant regulatory agency (such as the Securities Regulatory Commission). During this process, the victim needs to pay attention to retaining relevant evidence. For example, the agreement signed between the user and the trading platform, all transactions, transfers, etc. records of the user, all records of communication between the user and the trading platform, promotional materials introduced and promoted by relevant internet celebrities (KOL) for the trading platform, user and relevant internet celebrities (KOL) All records of communication.
Second, victims can apply to the court to identify and preserve assets. Specifically, it includes obtaining bank records through Bankers' trust order to confirm whether funds are still in certain accounts and tracking the flow of funds; requesting third parties (such as banks, etc.) through Third Party Disclosure Order (Norwich Pharmacal order) Disclose the identity of relevant bank account owners and cryptocurrency wallet holders; prevent fraudsters and recipients from transferring assets through asset freezing injunctions (Mareva injunction); protect specific assets in which they have ownership through proprietary injunctions.
Finally, there are these ways to protect the legitimate rights and interests of victims. For example, using a compensation order to obtain civil compensation in criminal proceedings; suing the platform for breach of contract based on the contract signed with the trading platform, and filing related infringement lawsuits against the trading platform; pursuant to Article 108 of the Securities and Futures Ordinance (below) (civil liability for fraudulent misrepresentation, reckless misrepresentation or negligent misrepresentation to induce others to invest money) or civil liability for market misconduct under Article 281 to prosecute relevant persons; or to prosecute relevant internet celebrities (KOL) ) filed relevant civil lawsuits. It is worth noting that victims may use criminal convictions as evidence in related civil proceedings.
Jiang Qian believes that the Hong Kong Securities Regulatory Commission is still continuously improving protective measures and demonstrating a strict regulatory attitude. Take the current KYC (Know Your Customer) regulations for investors in virtual asset trading platforms as an example. Even users who are familiar with the platform are required to provide detailed personal information that is no less detailed than opening an account at a Hong Kong securities company or bank. The requirements are likely to be further improved in the future. improve.
Through detailed KYC, the China Securities Regulatory Commission hopes to clarify the understanding and risk tolerance of investors on the platform about digital assets. What is worthy of attention is that this regulation also places very high requirements on digital asset trading platforms. The platform only allows users with real professional knowledge to become its customers, thereby narrowing the scope of victims as much as possible.
Protecting the interests of individual investors is also an important task of trading and regulatory agencies.
The huge market brought about by the development of Web3 will inevitably be targeted by criminals, bringing various new security risks. Criminal methods such as fraud, theft, and money laundering that appear in the traditional financial field and market have gradually penetrated into the Web3 world.
Rather than asking ordinary investors to “keep their eyes open” to improve their self-discrimination and risk prevention awareness, trading and regulatory agencies can proactively ensure the safety of virtual asset transactions and can exert more proactive effects. The issue of "how to protect the interests of individual investors" is not only something that individual investors need to pay attention to, but it is also something that trading and regulatory agencies need to pay attention to.
Bi Lianghuan, chief researcher of Ouke Cloud Chain, pointed out that in the face of Hong Kong’s gradually opening up regulatory environment and against the macro background of frequent virtual transaction security incidents in the United States, Singapore and other places, in the future, on-chain security compliance will become the key to trading platforms. One of the core competitiveness, now is a good time for the trading platform and the Hong Kong government regulatory authorities to reasonably improve the safety of transaction compliance.
Take security tokens as an example. When security tokens can circulate freely without relying on intermediaries, the compliance of inter-institutional transactions must be ensured by layers of KYC (Know Your Customer). The most effective approach for financial institutions is that in addition to maintaining regular KYC, KYA (Know Your Address) and KYT (Know Your Transactions) on the chain are also particularly important.
With Hong Kong's new licensing system taking effect in June, Ouke Cloud Chain launched the Onchain AML anti-money laundering compliance technology solution for the entire industry during the same period. The solution includes two key capabilities: KYA and KYT. KYT can comprehensively monitor on-chain transaction risks and can effectively identify high-risk behaviors and suspicious transactions in virtual asset transactions. It currently has transaction detection and full-currency analysis capabilities for 127 public chains; KYA has supported 14 major public chains. On-chain address risk identification and analysis can automatically scan suspicious transactions, blacklist addresses, blacklist address associations, high-risk identities and entity risks from 5 dimensions, helping relevant institutions to take appropriate measures based on risk characteristics.
Ouke Cloud Chain has currently provided a series of services including on-chain data, on-chain anti-money laundering (Onchain AML) for HashKey, the first licensed retail virtual asset exchange in Hong Kong. Ouke Cloud Chain can also provide similar virtual asset trading platforms. services to meet the security and compliance needs of their transactions. Use technology to empower virtual transaction security and promote the joint efforts of the industry and the government. In the future, Ouke Cloud Chain will use its years of experience accumulation and advanced technology to play a proactive role in the construction of Web3 compliance security and promote the overall security of the industry. construction process.