Hong Kong authorities are closing in on a fraudulent cryptocurrency exchange that falsely claimed to be affiliated with Tesla CEO and Dogecoin proponent Elon Musk. The Hong Kong Securities and Futures Commission (HKSFC) has issued a warning against Quantum AI, an entity that allegedly offers artificial intelligence (AI)-based crypto trading services.
Quantum AI, based in Hong Kong, falsely claimed a direct affiliation with Musk on its now-defunct website. The entity stated that Musk had developed the AI technology used for crypto trading. It even displayed AI-generated videos and images of Elon Musk on its website and social media platforms.
The Hong Kong SFC also suspected Quantum AI of spreading false and misleading information about itself through an undisclosed news website. Its motive was to promote its crypto trading services and gain legitimacy among unsuspecting crypto investors in Hong Kong. The alert issued by the Hong Kong SFC stated, “It claims on the ‘news’ website that the Hong Kong public has been using its technology to trade in cryptocurrencies and is able to earn ‘too-good-to-be-true’ returns.”
According to local media outlet Jinse, the HKSFC has directed the Hong Kong police to block Quantum AI’s website and remove all related social media pages.
In total, 23 crypto exchanges have applied for license registration in Hong Kong. However, the HKSFC has stopped accepting crypto license applications since February and has instructed all unlicensed entities to cease operations by the end of May.
In related news, amidst the crackdown on unlicensed crypto exchanges, the Hong Kong Monetary Authority (HKMA) and the Central Bank of Hong Kong have announced a collaboration with local private sector firms such as HSBC and HashKey to explore asset tokenization.
On May 7, the HKMA announced the establishment of the “Project Ensemble Architecture Community,” a special community consisting of industry representatives and regulators aimed at developing tokenization standards. The initiative also aims to promote and support interoperability among wholesale central bank digital currencies (wCBDCs), which are a type of digital money used by banks and financial institutions.