Hong Kong, Macau police arrest 4 people ‘relatively close to core’ of JPEX crypto scandal; 1 found with destroyed documents in dramatic bust Police in Hong Kong and Macau reveal fresh arrests in connection with JPEX cryptocurrency exchange, saying they are tracking down a number of fugitives
Move brings total to 18 detained, with one man from latest arrests found with documents shredded and bleached in flat’s bath
Police in Hong Kong and Macau on Friday said they had arrested four people “relatively close to the core” of under-investigation cryptocurrency platform JPEX in a dramatic bust in which one man detained was found in a flat with documents shredded and bleached in the bath.
The Hong Kong Police Force revealed it was tracking down other fugitives in connection with fraud and money-laundering offences.
The developments came as the Securities and Futures Commission (SFC) warned investors about another unlicensed virtual asset trading platform, FUBT Exchange.
The commission said the company provided a fake Hong Kong phone number to make it appear it had a presence in the city. Mainland Chinese media reports showed that a platform of the same name went bust in May 2020.
The city’s police said two Hongkongers, both 29, had been detained in Macau with HK$6.5 million (US$830,390) in cash and valuables seized, along with HK$8.2 million frozen in their casino accounts in connection with the JPEX investigation. Macau police said the two were owners of cash-for-crypto shops.
Hong Kong police arrested another two men, both 28, including one surnamed Tang who was found in a flat that also contained documents that appeared to have been shredded and bleached in the bath.
A large sum in cash, about HK$880,000, was also found in the flat.
Photos from the force showed that tiny pieces of paper were found in a bath filled with liquid, as well as in a rubbish bag.
The other man, surnamed Wong, was detained as the force searched two flats that contained a “massive” number of documents, as well as unauthorised Visa cards with “JPEX” printed on them.
The latest arrests brought the tally of people detained so far in the fast-expanding case to 18, all of them Hong Kong residents.
Hong Kong police also seized cash and gold worth about HK$8.7 million at three flats in the latest operation.
Chung Wing-man, an assistant police commissioner, declined to outline the roles the latest four detained were alleged to have played. But she said they were “relatively close to the core” of JPEX operations.
She added that the force had also traced several people who had fled the city and that international cooperation would be asked for.
“We believe our investigation has reached figures that are close to the core, but we still need to find out whether the mastermind is an individual or a group,” Chung said.
“We found the scale of the syndicate is very big, there’s still massive investigation work that needs to be done. The loss is expected to be more than HK$1.5 billion.”
The latest operation in Hong Kong and Macau seized a total of HK$24 million in assets, including luxury watches and gold bars.
The city’s force added it had also seized cryptocurrency worth HK$5 million related to JPEX, but it had hit problems in tracking down the digital assets because of the number of transactions and their anonymity.
“The case involves thousands of digital wallets and tens of thousands of transactions. These cryptocurrencies were transferred between different digital wallets in a short period of time and could go to overseas trading platforms,” Chief Superintendent Kelly Cheng Lai-ki of the cyber security and technology crime bureau said.
“Both buyers and sellers can hide their identities.”
She added that the force had contacted a variety of trading platforms to recover virtual assets in connection with the investigation.
Blockchain analytics firm Bitrace earlier found that 22 per cent of Tether, or USDT, tokens held in one of the wallets said to be associated with JPEX had been labelled “contaminated” because of alleged ties to online gambling, the black market and money laundering.
Police said they had received 2,417 complaints against the trading platform involving more than HK$1.5 billion in alleged losses by Friday.
Earlier arrests involved social media influencers who had set up their own over-the-counter crypto changer shops, including Chan Wing-yee, Joseph Lam Chok and Sheena Leung. The force on Friday declined to comment on their alleged roles.
Many alleged victims are novice investors in virtual assets who were drawn to the platform by the promotional drives of influencers and “investment classes” run by crypto-for-cash changer shops.
The JPEX saga started on September 13 when the SFC said the platform had been operating in Hong Kong without a licence and accused it of a number of “suspicious features”.
But, despite coming under fire, the platform remained defiant and hit users with an exorbitant fee for virtual asset withdrawals.
Chung declined to comment if the force had received complaints about JPEX before September 13 or on intelligence-sharing between the force and the SFC, although he said the two organisations had maintained close contact.
“We will seek further ways to enhance the collaboration and intelligence exchange between the SFC and police,” Chung said.
Amid the withdrawal curbs, Bitrace still observed an “unusual outflow” of 7.2 million USDTs out of JPEX wallets between September 13 and 20, which raised fears among users that the platform was attempting to drain its accounts. One USDT is equivalent to US$1.
JPEX, which claims to be Dubai-based, has remained in operation, although access to its services from Hong Kong has been blocked, reportedly by police order.
The SFC, which put out nine alerts related to virtual asset trading platforms before it named JPEX, has been accused of a failure to take action against the platform earlier.
The watchdog has since released a list of exchange firms that have submitted applications for a licence under a regulatory regime that came into force in June.
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