Hong Kong’s first criminal case involving an unlicensed financial influencer has concluded, with Zhou Baixian sentenced to imprisonment for providing unlicensed securities investment advice through Telegram groups. This marks a significant tightening of regulation over investment consulting services offered on social platforms.
This case serves as a clear warning to cryptocurrency Key Opinion Leaders (KOLs): Hong Kong and global authorities are strengthening oversight of financial influencers, and the virtual asset sector may adopt licensing requirements modeled after traditional finance, making compliance a key to survival in the industry.
Event Summary
On November 7, 2025, the Eastern Magistrates’ Court of Hong Kong ruled that Zhou Baixian, a financial internet celebrity, was guilty of providing unlicensed investment advice through a paid Telegram group. He was suspected of committing the offense for six weeks, and the court ordered him to bear the investigation costs of the Securities and Futures Commission (SFC) of Hong Kong. This case marks the first criminal prosecution initiated by Hong Kong against an unlicensed financial internet celebrity, signifying the end of the era of “unregulated growth” in investment advisory services on social media platforms.
Regulatory Framework and Violations
The judgment was based on Hong Kong’s Securities and Futures Ordinance. Zhou’s act of “giving advice on securities” falls under Type 4 regulated activity, which requires prior licensing from the SFC. Three key criteria were used to establish the violation:
- •Profitability: Conducting commercial activities for profit, with fee-based models (e.g., subscription fees) directly constituting business operations.
- •Continuity: Regularly publishing analyses and responding to specific investor questions.
- •Targeted Nature: Providing explicit advice on specific securities (e.g., Nasdaq-listed stocks), exceeding the scope of “general opinion sharing.”
Operating under the name “Futu Major Shareholder,” Zhou ran the paid Telegram subscription group “Futu True Wealth Private Group.” Without obtaining an SFC license, he provided Hong Kong subscribers with specific securities comments, target prices, and consulting services, illegally profiting HK$43,600 through monthly fees (US$200 or HK$1,560). His actions fully met the criteria for “giving advice on securities.”
Key Compliance Requirements
The case highlights two core compliance requirements for unlicensed financial influencers in Hong Kong:
- Platform is Not an Excuse: Whether using Telegram, Discord, or emerging social platforms, any provision of investment advice requires a valid license.
- Audience Determines Jurisdiction: Even if servers are located overseas, regulation by Hong Kong authorities applies if the target audience includes Hong Kong investors.
In previous similar cases involving Hong Kong financial influencers, a licensed representative had their license suspended for operating paid groups in a personal capacity. However, this case is the first to impose criminal penalties, underscoring Hong Kong’s intensified regulation of unlicensed investment advice provided by financial influencers.
The verdict aligns with the global trend of stricter oversight of “financial influencers.” As financial markets evolve, regulators worldwide are increasingly focusing on investor protection and market integrity, while vigilantly addressing risks of investor misinformation from harmful social media content.
- •UK Financial Conduct Authority (FCA): Has established a clear regulatory framework for financial promotion activities, particularly those involving cryptocurrencies and financial influencers. All investment promotions on social media require prior approval; financial institutions are prohibited from promoting “inappropriate” investment behaviors, and financial promotions must be “fair, clear, and not misleading.” Violations may result in criminal penalties and fines.
- •US Securities and Exchange Commission (SEC): Aggressively cracks down on unlicensed financial promotion, imposing fines (up to millions of US dollars) on companies and individual influencers for rule violations or market manipulation. For example, the SEC fined an investment management company US$1.75 million for failing to disclose a social media influencer’s promotional role in launching an exchange-traded fund (ETF) and the influencer’s fee structure tied to the fund’s growth.
- •Mainland China Regulators: Authorities such as the Cyberspace Administration of China continue to rectify illegal financial information practices, including unlicensed stock recommendation and virtual currency trading speculation, and have taken legal action against relevant accounts and websites.
Clearly, financial influencers and their promotional activities are being brought under stricter, more international regulatory scrutiny, requiring all relevant participants to prioritize compliance risks.
Implications for Cryptocurrency KOLs
While the case directly involves traditional securities investment advice, the regulatory signals it sends will also impact the crypto asset sector. The verdict is rooted in the principle of investor protection, which is equally critical in the crypto asset market, where risk profiles are more complex.
Recent years have seen growing investor protection issues in the crypto space. A 2025 VISTA study shows that 58% of Generation Z and Millennials prioritize self-directed investment. However, many lack the professional knowledge to assess risks associated with unregulated investment advice and are vulnerable to aggressive, misleading promotions. This has led to a surge in speculative trading in the crypto market, with some investors losing their life savings due to investments in volatile assets such as contracts for difference (CFDs) or unregistered crypto tokens. In multiple incidents, including Hong Kong’s JPEX case, investors reported suffering losses after being influenced by online promotions and social media investment advice.
Hong Kong’s JPEX crypto asset platform fraud case—one of the largest crypto scams in the region in recent years—involved over HK$1.6 billion in losses and more than 2,700 victims. JPEX personnel attracted investors through advertisements, social media, over-the-counter exchanges, and promotions by influencers/KOLs, touting “legal compliance, celebrity endorsements, low risk, and high returns.” Ultimately, client funds were transferred to crypto wallets for money laundering and exploitation. In this case, the police also invoked for the first time the provision in the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (effective 2023) criminalizing “fraudulently or recklessly inducing others to invest in virtual assets,” prosecuting multiple involved influencers. The case reflects both investors’ susceptibility to misinformation from online promotions and social media opinion leaders, and authorities’ commitment to regulating harmful promotional practices in the virtual asset space.
Hong Kong is steadily advancing the improvement of its virtual asset regulatory framework, emphasizing compliance for tokenized assets and establishing a licensing system to oversee virtual asset-related services. In the future, Hong Kong may align the regulation of crypto asset KOLs with that of stock commentators in traditional finance, requiring higher professional standards and disclosure obligations when providing investment advice. This aims to prevent unregulated promotion and misleading information in the crypto market, safeguard market order, and protect investors.
Amid tightening regulation, financial influencers and content creators in the crypto space must pay close attention to potential legal and compliance risks. As the SFC plans to require brokerages to conduct due diligence on collaborating KOLs and continuously monitor their content, operating costs and compliance thresholds for the entire KOL industry are likely to rise significantly.
Against this backdrop, market participants face two main options:
- Adjust Content to Avoid Regulatory Red Lines: Shift focus to educational content such as blockchain technology analysis, macro trend interpretation, and risk management. Avoid mentioning specific token trading prices or target levels, exercise greater caution in defining content boundaries, and clearly disclose risks and conflicts of interest to avoid being deemed as providing “investment advice.”
- Proactively Pursue Compliance Through Licensed Partnerships: Collaborate with licensed virtual asset trading platforms (e.g., HashKey, OSL) or traditional licensed institutions to integrate content creation into a compliant framework.
These industry adjustments will enhance overall compliance but may also bring structural changes: investor access to investment advice may be restricted, the cost of professional consulting services may increase, and some market participants may downsize or relocate to jurisdictions with looser regulations due to inability to bear compliance costs. However, in the long run, establishing a clear regulatory framework will foster the healthy development of the crypto asset market:
- •It will improve market transparency, better protect retail investors from “pump-and-dump” scams, and boost confidence among institutional investors.
- •It may drive the industry toward more professional, value-driven content creation, striking a better balance between investor protection and industry development.
Conclusion
The Zhou Baixian case serves as a mirror reflecting Hong Kong’s efforts to safeguard financial security and protect ordinary investors. For crypto KOLs, it is a clear warning: Web3 KOLs are also obligated to comply with regulations.
“Decentralization” does not mean “no regulation”—technological innovation must go hand in hand with investor protection. As Hong Kong’s virtual asset regulatory framework continues to improve, only participants who can grasp market trends while adhering to compliance boundaries will thrive in the new era.
Hong Kong’s ability to balance Web3 innovation with market integrity in the future will depend on the joint efforts of regulatory wisdom and industry self-discipline. This verdict is undoubtedly a crucial milestone in this process.