- Hong Kong authorities have arrested 11 suspects linked to the JPEX exchange as masterminds go on the run.
- Regulatory oversight and the vulnerability of investors.
In what some are calling the largest financial fraud ever to hit Hong Kong, the orchestrators behind the JPEX alleged crypto exchange scandal have managed to evade authorities, despite 11 individuals having been brought in for questioning regarding the case. A report as of September 23, police in Hong Kong have received an astounding 2,265 complaints from victims of the exchange, estimating the total financial loss to be around $178 million (1.4 billion Hong Kong dollars).
JPEX exchange users face difficulties withdrawing funds
The heart of the issue appears to be connected to difficulties experienced by users when attempting to withdraw cryptocurrency from the platform. Notably, on September 15, the JPEX exchange increased its withdrawal fees to a staggering 999 Tether. Among those questioned by authorities is Joseph Lam Chok, a crypto influencer who has repeatedly tried to distance himself publicly from the exchange. In addition to Lam Chok, three employees of the JPEX Technical Support Company have been arrested, along with two YouTubers, Chan Wing-yee and Chu Ka-fai.
These individuals collectively have more than 200,000 followers on their platforms, all of whom are linked to the scandal in some way. Other individuals sought for questioning include the company’s sole director, Kwok Ho-lun, a restaurant director, and three celebrities who had reportedly promoted JPEX at various points in the past. Despite these apprehensions, Hong Kong authorities have confirmed that the masterminds behind the operation remain at large. The police have reiterated that their investigation is ongoing, and more arrests are expected in the near future.
In their pursuit of justice, local police have sought assistance from Interpol and other international law enforcement agencies after identifying suspicious crypto transfers originating from the JPEX exchange. Additionally, they have requested that local telecommunications providers block access to the exchange’s website. The unraveling of the JPEX scandal began on September 13, during the Token2049 conference in Singapore, when the JPEX team reportedly abandoned their corporate booth following the arrest of six employees by Hong Kong police.
Regulatory oversight and the vulnerability of investors
The arrests were made on charges of fraud related to the operation of an unlicensed crypto exchange. This scandal first came to public attention when Hong Kong’s financial regulator disclosed that it had received over 1,000 complaints about the unregistered crypto exchange platform. These complaints alleged losses exceeding $128 million (1 billion HK dollars). In response, the exchange took actions such as shutting down several yield-bearing products and dramatically increasing withdrawal fees to 999 USDT. JPEX placed the blame on third-party market makers, accusing them of “maliciously” freezing liquidity.
At the time, the exchange claimed that it had attempted to register with relevant authorities and asserted that it had faced “unfair” treatment from regulatory bodies, including the Securities and Futures Commission (SFC). In a statement issued on September 20, the SFC confirmed that JPEX had been operating without the necessary license for virtual asset trading. On its official website, JPEX states that it is headquartered in Dubai and boasts licenses for crypto trading activities in the United States, Canada, and Australia.
Founded in 2020, JPEX had claimed to manage assets worth approximately $2 billion and had aspirations of ranking among the world’s top five crypto exchanges. The JPEX scandal continues to raise questions about the regulatory oversight of crypto exchanges and the vulnerability of investors in this space. As authorities pursue the individuals responsible for the alleged fraud, the broader cryptocurrency community watches closely, aware of the importance of maintaining trust in the rapidly evolving digital asset landscape.
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