The Securities and Futures Commission (SFC) from Hong Kong has warned the public about suspicious investment products in ProCap International and its related entities' market. These products, which involve policies and gaming packages, claim to provide insurance coverage for investment capital and offer investors guaranteed monthly returns ranging from 6% to 42%.
Martingale and the Promise of Too-Good-to-Be-True Returns
"By starting with a $5,110 capital, you can implement the strategy and engage in a maximum of 9 games. By repeating this process 20 times a day, you can earn $200 daily. This leads to a total of $200 x 30 days = $6,000 a month," this is how scammers from PropCap advertise their offer, enticing people to invest in a supposed risk-free scheme that promises monthly returns often not achievable even over a whole year.
The "secret" to success is claimed to be the use of the Martingale strategy, which involves doubling the size of the investment each time a loss occurs on the first attempt. This popular strategy is used in casinos, though it may require significant capital resources and carries considerable risk.
Additionally, ProCap promises "risk pooling" by managing the capital of several individuals simultaneously, along with its proprietary "formula" based on the law of large numbers, which aims to increase the chance of successful investments.
"The SFC notes that these products offer investors very high guaranteed returns at a rate ranging from 6% to 42% per month when investors engage in prediction games, together with other benefits, including referral incentives," the SFC commented.
According to the SFC, Hong Kong investors may have been targeted by these unauthorized investment products promoted by ProCap. The regulator noted that information about these products is accessible to the public of Hong Kong via the Internet, despite the fact that none of them are authorized to offer them to the public.
In response to these findings, the SFC added ProCap's investment products and related information to its alert list on 8 April. The regulator cautions the public against investing in any non-SFC-authorized investment products, as investors have limited or no protection and may lose all their investment.
The SFC reminds the public to be cautious about "too-good-to-be-true" investment opportunities and to remain vigilant when making investment decisions. The regulator also emphasizes that it will take all appropriate action for any legal breach.
Recent SFC’s Warnings
Hong Kong's financial regulator has been one of the most proactive watchdogs globally in issuing warnings and updating its alert list. In recent months, the SFC has taken action against several suspicious trading platforms and virtual asset service providers.
In March, the SFC cautioned the public about a purported virtual asset trading platform called "MEXC." Despite actively promoting its services to Hong Kong investors, MEXC neither holds an SFC license nor has initiated the process to obtain one to operate a virtual assets provider authorization in the city.
Also in March, the SFC sounded the alarm against two dubious trading platforms, HKCEXP and EDY. The regulator released an official statement on its website, urging investors to exercise caution when engaging with these platforms due to suspicions of fraudulent activities.
In April, the SFC warned the public about an unlicensed virtual asset trading platform, Sure X, which was suspected of marketing services to investors without proper authorization. The regulator emphasized the risks of potential losses due to platform failure, hacking, or misappropriation of assets.
Additionally, the SFC has set its sights on Bybit, one of the world's largest cryptocurrency exchanges. The regulator warned investors about Bybit and several of its offerings, highlighting the exchange's lack of licensing and cautioning about the risks of engaging with the firm. The SFC has flagged 11 of Bybit's products as suspicious investments, raising concerns about potential risks to investors.
