By
Chimamanda U. Martha
April 25th, 2024
Despite both companies’ denials, people familiar with the matter said that HKVAEX and Binance share deeper connections than acknowledged.
HKVAEX, a cryptocurrency exchange allegedly backed by Binance, has withdrawn its application to obtain a regulatory license to offer its business offerings in Hong Kong following the country’s introduction of a comprehensive regulatory framework for digital asset service providers (DASPs).
The company, which offers its products and services to the public as BX Services Limited, applied for the license on January 4, 2024. However, on March 28, 2024, the firm appeared on the list of applicants who had withdrawn their applications, according to the Hong Kong Securities and Futures Commission (SFC) website.
HKVAEX Joins HTX to Withdraw Application
The SFC announced last year that it had started accepting applications from crypto exchanges seeking to enter the country and explore its digital asset market legally.
Earlier this month, Coinspeaker reported that 22 crypto exchanges had submitted applications to the SFC for licensing. However, in February, one of these companies, HTX (formerly known as Huobi Global), withdrew its application, citing regulatory issues.
HKVAEX has now followed in the footprints of HTX and is withdrawing its application from the SFC. While the reason behind the withdrawal remains unknown, Chinese crypto reporter Wu Blockchain suggested that it might be related to insufficient materials.
The HKVAEX Hong Kong compliant cryptocurrency exchange license applied by Binance's Hong Kong entity BX SERVICES LIMITED has been withdrawn. The reasons for the withdrawal are unclear and may include a request to change the audit company, insufficient materials, etc.…
— Wu Blockchain (@WuBlockchain) March 29, 2024
HKVAEX to Leave the Hong Kong Market
With the application withdrawn, the company now has until May 31 to close down its business in Hong Kong, as per the deadline set by the SFC.
The regulator had initially set a deadline of February 29, 2024, for all DASPs to apply for a license or exit the market by May.
“Virtual asset trading platforms operating in Hong Kong, which have not submitted their license applications to the SFC by February 29, 2024, must close down their businesses in Hong Kong by May 31, 2024. Investors using these platforms should make preparations early,” said the SFC.
Binance reportedly acquired HKVAEX in October 2023 to pursue licensing in Hong Kong. However, the firm denied having any relationship with Binance, noting that it is an independent platform run by a team of financial experts.
Binance, on the other hand, denied having any close ties with the exchange, clarifying that it does not belong to its Group or affiliates.
Denials and Speculations
Despite both companies’ denials, people familiar with the matter said that HKVAEX and Binance share deeper connections than acknowledged.
According to the people, the exchange uses Binance resources, including technicalities, with HKVAEX reportedly using Binance servers to fetch content.
Additionally, both companies were reportedly present at various events in Hong Kong last year. This includes a notable instance in July when Stanley Fung, CEO of HKVAEX, and Nathan Swain, Chief Information Security Officer of Binance, shared the stage at the Web3 Connect event organized by Cyberport.
Adding to the intrigue, in a promotion campaign last year, HKVAEX listed Binance as a partner to attract people to sign up on the platform.