3 crypto exchanges suspended in Philippines’ economic zone

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Three virtual currency exchanges in the Philippines province of Cagayan have been suspended by local authorities, in order to allow for more thorough due diligence into licensees, ABS-CBN reported.

The Cagayan Economic Zone Authority (CEZA) ruled that its crypto exchange licensees would face temporary suspensions amid a move to Cagayan, with some 40 firms currently holding licenses that would be subject to the suspension.

This includes 25 firms licensed by the authority on an off-shore basis alongside 15 firms holding regular licenses. As of Wednesday, only three of the firms are active.

Golden Millennial Quickpay, Liannet Technology Ltd and Asia Premier are based in Metro Manila. Their licenses will be temporarily halted as they move to oversight by the Cagayan Economic Zone Authority.

A senior official said this would allow the authority to conduct due diligence into the firms, amid reports of fraud in the sector.

Chinese-based offshore firm Golden Millennial Quickpay was raided by law enforcement officers last week, with 270 of the firm’s staff arrested as part of a probe into alleged investor fraud.

As part of the investigation, the firm has had its license suspended for 90 days, with the threat of revocation if wrongdoing is confirmed.

CEZA spokesperson and Fintech and Cryptocurrency business officer Mike David was quoted by the news outlet saying the suspensions would be temporary until the authorities could gain a better understanding of how its licensees operate.

Their operation is temporary. We are pushed by our circumstances because of the lack of our facilities in Cagayan. After the incident, there can be zero tolerance until movement to Cagayan.

Allegedly running a crypto investment scam, David said Golden Millennial Quickpay has alarmed the authority and was one of the main drivers of the licensing review.

“How can an exchange commit fraud? Maybe there are virtual agents or brokers that could have penetrated the exchange. We are alarmed by this incident. There are external factors, elements and we are looking into that also,” David said.

The move shows the challenges faced by regulators in upholding standards in the crypto sector.

Far too many scams and fraudulent companies continue to operate, sometimes even with official licenses to trade, highlighting the importance of effective governance and regulation for the sector.