Arta TechFin looks to blockchain finance after restructuring overseen by New World Development scion Adrian Cheng

Arta TechFin, which completed a restructuring last year after a white knight rescue, plans to pivot to blockchain-backed financial services
Under a new management team, Arta TechFin plans to seek approval from SFC to expand the scope of its licensed activities

Fintech

Georgina Lee

Published: 10:00am, 14 Mar 2022

Why you can trust SCMP

Arta TechFin, the successor of troubled Hong Kong-listed brokerage Freeman Fintech rescued in 2020 by New World Development chief executive Adrian Cheng Chi-kong, wants to reposition itself as a “hybrid finance” player.

The company is currently rebuilding its businesses targeting family offices, small and medium-sized enterprises (SME), and retail clients, chief executive Eddie Lau said.

“We see an opportunity for us to combine virtual asset servicing with traditional financial services,” he added. “Very few traditional brokers and banks have expanded into crypto assets.”

Adrian Cheng’s C Ventures invests in UK consumer tech start-up Nothing

For compliance reasons, many banks in Hong Kong have withheld services to clients dealing in cryptocurrencies. This contrasts with other markets, such as Singapore, where DBS – the largest banking group in Southeast Asia by asset – launched a crypto exchange for institutional clients in 2021, with plans to expand trading service to retail clients this year.

Before the white knight rescue in 2020, Freeman Fintech was involved in securities, futures and insurance brokerage. Arta TechFin inherited a host of Freeman’s licences, which would enable the new firm to engage in a number of regulated activities, such as securities dealing, asset management, and lending.

Under the virtual asset service provider regulatory framework proposed by the Hong Kong government, all platforms providing crypto asset trading services must be licensed. Failure to do so would result in penalties, such as imprisonment.

Arta TechFin plans to seek approval from the Securities and Futures Commission (SFC) to expand the scope of its licensed activities to cover virtual assets.

Right now, Arta TechFin is focused on providing blockchain and data services to family offices and hedge funds, helping these clients cut back on back-office investment by restructuring their financial data and automating their workflow.

For example, the company has been testing a service that would enable family offices to provide private lending to a SME borrower on the blockchain, Lau said.

Lau, who had 20 years of experience in investment management and trading before joining Arta TechFin last June, said the company plans to grow its headcount to about 120 in the next 12 months, from 70 currently.

Guo Dan, one of seven founding members of Chinese search engine and artificial intelligence giant Baidu, joined Arta TechFin as a senior adviser. Guo’s own company is partnering with Arta TechFin to provide big data analytics to potential clients.

Freeman Fintech fell into bankruptcy in 2019 before Cheng bailed out the company a year later.

The deal entailed up to HK$201 million (US$25.6 million) in loans owed to Freeman’s creditors. The company had HK$4.21 billion in outstanding claims as of March 2021, exchange filings showed.

Cheng – now chairman of Arta TechFin – injected HK$80 million (US$10 million) into the company, which gave him a 75 per cent stake, according to exchange filings. Arta TechFin’s restructuring was completed last November.

During the 10-month period ended this January, Arta TechFin incurred an operating loss of HK$14 million, exchange filings showed.

Post