MANILA, Philippines — The Cagayan Economic Zone Authority (CEZA) has ordered the suspension of operations of financial technology and offshore virtual currency exchange (OVCE) licensees amid an ongoing investigation on Golden Millenial QuickPay Inc. Ltd. (GMQ), which was granted a license by the agency, on allegations of involvement in an investment scam.
Mike Gerald David, spokesperson and chief fintech and cryptocurrency business officer at CEZA, said in a recent press conference the agency is “suspending the operation of all our licensees in Manila, just to put some sort of a freeze and talk to them.”
To date, CEZA has approved 25 principal licensees and 15 regular licensees.
Of the 25 principal licensees, three have offices in Manila – GMQ, Liannet Technology Ltd. and Asia Premier International Ltd.
The suspension of operations of fintech and OVCE licensees follows CEZA’s probe on GMQ.
Last week, the Bureau of Immigration (BI) raided the office of GMQ’s service provider Grapefruit Service Inc. in Pasig City, based on a mission order to arrest four Chinese fugitives wanted for economic crimes in China.
During the joint operation with the Presidential Anti-Corruption Commission, Philippine National Police and the Chinese Ministry of Public Security, the four Chinese fugitives were arrested along with 273 other Chinese nationals who were found to be undocumented.
“The allegation was, these are undocumented personnel. This is subject to our investigation. What we do have right now, we have 106 of them are registered with us, which leaves the rest of 277 for us to investigate. How did this happen? Why did this happen? We are working closely with the BI on this,” David said.
“When it comes to the investment scam, in fact, we are actually looking at how was it done. Because in the first case, we are licensing GMQ to operate an exchange. The exchange is, for a more traditional analogy, the exchange is like the Philippine Stock Exchange or any other stock exchange where a lot of transactions could happen. Perhaps, there are also times when there are investments that are misguided, misrepresented. But in our case, which brings us to the investigation, we do not know how the exchange can actually perpetrate it at all,” he said.
While the investigation on GMQ is ongoing, CEZA is also conducting a review of reports submitted by licensees on their legal, regulatory and ethical compliance practices and standards.
“These reports are under review at this time and will form the basis for further internal investigation should any deficiencies be uncovered. Any and all violations of legal, regulatory, or ethical compliance will be subject to all applicable sanctions under CEZA rules and Philippine law,” David said.
While CEZA grants licenses to fintech and OVCE firms as it aims to transform the Cagayan Special Economic Zone into a fintech solutions and blockchain hub, the agency does not provide licenses to Philippine firms and prohibits licensees from transacting with any Filipino citizen or person located in the Philippines.
CEZA also does not allow licensees to conduct business or OVCE exchanges in any foreign country like China, which prohibits such activity.