The Securities and Futures Commission (SFC) has issued a notice canceling the license of IDS Forex HK Limited. The regulator has also banned two CEOs of the company from further participation in the financial sector.
Hong Kong’s SFC released a statement on Thursday canceling its licenses to IDS Forex HK Limited. The SFC has also barred two of the company’s CEOs from further participation in the financial industry. Chung Woman and Ki Bonggan have been barred for life from entering the financial industry.
Financial Fraud by Broker
The action by the SFC comes four years after it issued a notice to the company urging them to halt all operations. The regulator had barred the company from conducting any more activities under the license it has been given. This action happened after an insider source shared revelations on the financial frauds committed by the company’s owner, Kim Sunghun.
Sunghun was found guilty of raising illegal funds and frauds and was sentenced in South Korea. He had solicited funds from investors from 2011 to 2016, urging them to invest in global businesses. However, Kim defrauded these investors and gave $192 million to the IDS Forex group as a cash injection.
The SFC notes that the two CEOs were aware of the illegality of the funds and were even involved in helping Kim defraud investors. The two CEOs did not share details with the SFC regarding Kim’s fraudulent dealings after he was arrested.
Because of their lack of disclosure, the regulator stated that the two lacked integrity and credibility in the financial sector. Failure in disclosing fraudulent dealings committed by Kim also showed a failure on the part of IDS Forex to be committed to investor protection.
Protecting investors through regulations
Regulators constantly urge firms dealing with digital assets such as FX and crypto to take the relevant precautions and maintain vigilance to protect investors. By taking measures to enhance this, the firms can collaborate with regulators to enhance the confidence of the market to the market, which enhances trading activities.
The SFC pointed out two significant areas of concern that the IDS failed to address, which led to drastic actions by the regulator. The timing to which Kim injected cash into the firm corresponded with the dates of his fraudulent investment schemes. Forex HK also failed to disclose any details to the SFC after Kim was arrested and convicted, which negatively affected their integrity and reliability.