Hong Kong’s JPEX crypto exchange faces scrutiny after the scandal, with 11 arrests, $178 million loss, and ongoing Interpol-assisted investigations.
Hong Kong’s JPEX crypto exchange continues to face scrutiny, with the masterminds behind the scandal evading arrest. Local authorities have detained 11 individuals, but the main perpetrators remain elusive. Interpol now joins the investigation as the number of complaints exceeds 2,200, amounting to a staggering $178 million loss.
Understanding the JPEX Fallout
The JPEX crypto exchange, once a promising platform, has now become a major concern for both investors and regulators in Hong Kong.
Victims claim difficulties in withdrawing their crypto investments after the exchange suddenly increased withdrawal fees to 999 Tether on September 15.
High-profile personalities, including crypto influencer Joseph Lam Chok and YouTubers Chan Wing-yee and Chu Ka-fai, are among those detained for their associations with the scandalous exchange. Yet, the central figures orchestrating the scheme have yet to face justice.
Details on the Detainees and Investigation
Authorities have detained various individuals linked to the JPEX exchange, including three employees from JPEX Technical Support Company. Apart from Lam Chok, Chan Wing-yee, and Chu Ka-fai, other detainees include Kwok Ho-lun, the sole director of JPEX, a restaurant director, and three celebrities who had previously endorsed the exchange. But while these individuals face questioning, Hong Kong’s police emphasize that the primary culprits remain at large. They anticipate more arrests as the investigation progresses.
With roots claimed in Dubai and alleged licensing in the US, Canada, and Australia, JPEX projected an image of global legitimacy. Moreover, the exchange, founded in 2020, boasted of managing assets worth $2 billion and aimed to rank among the top five crypto exchanges globally. Yet, their operations in Hong Kong drew attention when they allegedly left their corporate booth at the Token2049 conference in Singapore on September 13. This followed the arrest of six JPEX employees on charges of running an unlicensed crypto platform.
The Securities and Futures Commission (SFC) of Hong Kong played an instrumental role in bringing the JPEX issues to light. On September 13, they warned the public about the unregistered nature of the JPEX platform after receiving over 1,000 complaints, revealing financial losses surpassing $128 million. Following this, JPEX ceased several of its investment products and hiked its withdrawal fees. They laid blame on third-party market makers, accusing them of “malicious” actions. In their defense, JPEX stated they had tried to register with appropriate authorities, alleging unfair treatment from regulatory bodies, including the SFC.
SFC’s Measures in Response to the Scandal
In light of the JPEX debacle, the SFC is doubling down on its efforts against unregulated crypto trading platforms. They plan to unveil a comprehensive list, categorizing various virtual asset trading platforms (VATPs) based on their licensing status, potential closings, and pending applications. This initiative aims to empower the public to differentiate between regulated and unregulated VATPs in Hong Kong. Furthermore, they will spotlight a dedicated list of “suspicious VATPs” on their website, prominently featured for easy access.
Christopher “Kit” Wilson, the director of enforcement at the SFC, shared insights into the JPEX case. Due to unsatisfactory cooperation from JPEX stakeholders and the exchange’s evasive tactics, the SFC had flagged JPEX as early as July 2022. The situation intensified in April 2023, leading to a formal fraud investigation by June 2023.
As the aftermath of the JPEX scandal unfolds, with financial losses nearing $178 million, the SFC and local police are strengthening their collaboration. Furthermore, they aim to set up a dedicated communication channel for citizens to report suspicious activities and potential legal violations by VATPs. The goal remains clear: to ensure accountability, uphold market confidence, and safeguard the interests of investors in Hong Kong.