JPEX: Hong Kong investigates influencer-backed crypto exchange

  • By Joel Guinto & Martin Yip
  • in Singapore and Hong Kong

Image supply, Getty Images

Image caption,

Hong Kong is attempting to turn out to be a worldwide hub for next-generation applied sciences however a significant crypto scandal has hit the town

Hong Kong police are investigating allegations of fraud towards cryptocurrency buying and selling platform JPEX after traders complained of HK$1.3bn ($166m; £134m) in losses.

Eleven individuals, together with fashionable influencers, have been arrested this week after complaints filed by 2,000 individuals.

The case may very well be one among Hong Kong’s greatest fraud instances, native media say.

It additionally exams new monetary rules as Hong Kong positions itself as a worldwide hub for digital belongings.

Last week, Hong Kong’s Securities and Futures Commission (SFC) revealed the Dubai-based JPEX had been working and not using a license for digital asset buying and selling.

The platform, however, stated it had “strived to comply” with the native requirement which took impact in June this 12 months, however its efforts have been “dismissed or sidestepped with official rhetoric” by the Commission.

Many of the complainants are inexperienced traders who have been promised excessive yields, police stated. Aside from tapping influencers, JPEX additionally marketed broadly on Hong Kong’s MTR prepare system with large billboards.

Footage aired on native TV confirmed police escorting one of many arrested influencers, Joseph Lam, onto a automotive following a raid on his home. Mr Lam is a barrister turned insurance coverage salesman who describes himself on Instagram as Hong Kong’s “Trolling King”.

In his posts, Mr Lam confirmed his followers how Bitcoin income might assist them purchase a home and develop their social clout.

Also arrested was Chan Yee, a YouTube persona with 200,000 subscribers.

In Hong Kong, some buying and selling operations on JPEX have been shut down for the reason that arrests and the town’s authorities have appeared to dam net entry to it.

The platform has additionally stated it’s working to resolve a “liquidity shortage” as some customers have complained that they’re unable to withdraw their funds.

“This incident highlights the importance that when investors want to invest in virtual assets, then they must invest on platforms that are licensed,” he advised reporters.

Hong Kong has required digital asset buying and selling platforms to be licensed by the SFC for the reason that begin of June this 12 months. That is an offshoot of the amended Anti-Money Laundering and Counter-Terrorist Financing legislation from late 2022 that sought to reassert Hong Kong’s position as a world financial centre,

Mr Lee stated his authorities would step up investor schooling in order that the general public might higher perceive dangers and the way platforms are regulated.

There have lengthy been issues about cryptocurrencies on account of their lack of regulation and oversight by central banks. Despite this, customers have been drawn to the attraction of of peer-to-peer digital currencies.

Now, it’s in search of to ascertain itself as a hub for the subsequent technology of web applied sciences or Web 3.0, which incorporates cryptocurrency buying and selling. China has banned cryptocurrencies on the mainland since late 2021, saying it “seriously endangers the safety of people’s assets”.

The license requirement for platforms like JPEX is supposed to make sure accountability and compensation when wanted, Francis Fong, honorary president of the Hong Kong Information Technology Federation, advised BBC Chinese.

“It means that if there is supervision, nothing bad will happen.” he stated.

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Hong Kong authorities announce arrests linked to alleged fraud at JPEX

However, some digital financial system consultants have advised the BBC that current legal guidelines will not be sufficient to stop digital asset platforms from working illegally and to guard traders from losses.

On Facebook, anguished traders have fashioned Facebook teams named “JPEX Sufferers”.

One group member stated he was lured to JPEX due to the ubiquity of its MTR advertisements. Criticism of the prepare operator from web commentator Fung Hei-kin acquired 3,700 likes and 400 reposts.

According to its web site, JPEX is headquartered in Dubai within the United Arab Emirates and is licensed to facilitate commerce of digital belongings within the US, Canada and Australia. The About Us part of its web site exhibits blurry photographs of what look like the licenses from the three nations.

Founded in 2020, JPEX stated it dealt with $2bn value of belongings and aimed to be among the many world’s 5 largest digital asset exchanges.

A verify by Hong Kong’s South China Morning Post on JPEX’s Hong Kong handle confirmed the area was occupied by a co-working agency known as Coffee.

The publication quoted the store’s workers as saying that they have been unaware of JPEX and that Hong Kong police had checked on the handle earlier.

Image supply, Getty Images

Image caption,

JPEX has additionally tapped Taiwan’s Nine Chen as one among its influencers

JPEX additionally has an workplace in Taiwan, based on native media. However, a latest verify confirmed it to be empty. It had employed fashionable Taiwanese superstar, Nine Chen, as its influencer and as soon as sponsored a boxing match on the island.

Mr Chen had posted on Instagram final week, after Hong Kong regulators had stated that JPEX was working and not using a licence.

“After learning about the JPEX incident, I wanted to understand the situation, but currently I can’t contact the relevant people at JPEX,” he stated.

“The company is handling other details. If relevant units need to investigate, I will fully cooperate,” he stated.

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