Hong Kong Police Arrest Eight in JPEX Crypto Fraud Case
Hong Kong police have arrested eight individuals on suspicion of conspiracy to defraud in connection with cryptocurrency exchange JPEX, according to a press briefing today.
The police have received 1,641 complaints related to the JPEX case, with users claiming that they were unable to withdraw their assets from the exchange. The total amount of assets involved in the complaints is approximately HK$1.19 billion ($152 million).
In an operation called “tieguan” or “iron gate,” the police raided 20 locations in the city and seized cash, jewelry, computers, and phones worth about HK$8 million.
The authorities have frozen around HK$15 million in bank accounts belonging to the arrested suspects, as well as properties worth approximately HK$44 million. They are also considering confiscating more than HK$60 million in alleged criminal proceeds.
JPEX’s Troubles
The investigation into JPEX was initiated by the Securities and Futures Commission (SFC) after it warned that crypto influencers and the trading platform had made false or misleading statements on social media regarding JPEX’s application for a virtual asset trading license in Hong Kong.
JPEX responded to the police action by stating that it had received unfair treatment from the authorities. The exchange claimed that it faced continuous unfair treatment while other cryptocurrency exchanges were allowed to enter the Hong Kong market.
JPEX also announced that it had suspended some operations and increased withdrawal fees due to an ongoing liquidity crisis.
JPEX ‘Got Worse’ Despite Warnings
The SFC had listed JPEX as an unregistered company and suspicious website since July 2022. After Hong Kong’s crypto retail trading licensing regime came into effect in June this year, JPEX was required to either apply for a license or cease operations in Hong Kong. However, the exchange did not comply.
The SFC warned the public about the risks of unlicensed crypto exchanges on August 7. When JPEX continued to worsen, the SFC named the exchange in a public statement on September 13 and asked influencers and over-the-counter money exchanges to stop promoting JPEX.
The police received complaints about users failing to withdraw assets from JPEX after the SFC referred the case to them. JPEX’s token, JPC, had low liquidity and a withdrawal limit of 1,000 USDT. The exchange even increased the transaction fee to 999 USDT, effectively restricting withdrawals.
Hong Kong’s Web3 Ambition
In contrast to China’s crackdown on cryptocurrency trading and mining, Hong Kong has been welcoming crypto firms. The city released policy statements in October 2022 to strengthen its position as a global financial center.
Hong Kong introduced its crypto retail trading licensing regime in June, but only a small number of licenses have been granted so far by the SFC. Licensed exchanges must meet various requirements, including customer fund protection.
The COO of HashKey urged the public to choose licensed financial institutions for their investments to safeguard their assets. The SFC emphasized the need to expedite the licensing process and empower licensed exchanges with competitiveness to ensure a healthy market order.
Hot Take: Hong Kong Police Arrest Eight Suspects Linked to JPEX Crypto Fraud
Eight individuals have been arrested by Hong Kong police on suspicion of conspiracy to defraud related to cryptocurrency exchange JPEX. The arrests came after numerous complaints were filed against JPEX for failing to allow users to withdraw their assets. The total amount involved in the complaints is estimated at around HK$1.19 billion ($152 million). The police raided multiple locations and seized cash, jewelry, computers, and phones. Frozen assets and potential confiscation of criminal proceeds are also being considered. JPEX has faced accusations of unfair treatment and suspended operations due to a liquidity crisis. Hong Kong’s crypto industry aims to strengthen its position as a global financial center through licensing and regulations.
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