Hong Kong arrests 6 people in fraud probes linked to halted cryptocurrency platform JPEX, in a case that may ‘involve HK$1 billion in assets’
• Sources say ex-lawyer turned internet figure and YouTuber Chan Yee was detained on suspicion of conspiracy to defraud, with ‘about HK$1 billion’ involved
• Securities watchdog earlier accused trading platform JPEX of relying on misleading statements from social media influencers ‘who are often paid promoters’
Hong Kong police arrested six people in connection to the halted cryptocurrency trading platform JPEX, exposing the vulnerabilities of the city’s open economy and free-for-all internet in a scandal that could rake up as much as HK$1 billion in losses.
Police arrested four men and two women – including the influencers Joseph Lam Chok and Chan Wing-yee – on 18th September 2023 after receiving 1,408 complaints alleging fraud at JPEX, police said. The amount involved was estimated to be “about HK$1 billion (US$128 million)”.
JPEX, with offices and units in Dubai, Australia and the United States, halted cryptocurrency transactions on its Hong Kong platform on 18th September 2023, citing “negative news” and what it called “unfair treatment by relevant institutions” that caused its partners to freeze its funds. Two days earlier, JPEX was named by Hong Kong’s Securities and Futures Commission (SFC) for operating without a license, and for “misleading investors”.
JPEX has never been licensed to operate in Hong Kong, according to the SFC’s Alert List on July 8 last year. The platform also made false claims of being licensed by overseas regulators in its offer of high-yield products, according to the SFC.
The commercial crime bureau of the city police raided Lam’s office at the Entertainment Building in Central at around 11am. At around 12.30pm, plain-clothes officers escorted the ex-lawyer, who is now a well-known internet figure, out of the building to an unmarked police car.
Police also seized boxes of evidence, including a plastic bag containing banknotes, from his office. Lam was being detained at the Central Police Station along with the second influencer Chan on suspicion of the conspiracy to defraud, sources said.
Officers also raided the office of an over-the-counter (OTC) virtual asset money changer in Tsim Sha Tsui East. The case is under investigation, and more arrests are possible, the police said.
JPEX relied on misleading statements made by key opinion leaders (KOLs) “who are often paid promoters,” the SFC said.
“KOLs and OTC shops have made false or misleading statements on social media to suggest that JPEX has applied for a VATP [virtual trading platform] licence in Hong Kong, either independently or in partnership with a Hong Kong listed company, when in fact no entity in the JPEX group has submitted any VATP licence application to the SFC,” the commission said.
“The SFC has notified the relevant KOLs and OTC shops of the SFC’s suspicions and concerns, and requested them to cease promoting JPEX and its related services and products.”
On 16th September 2023 , police said they had received 83 complaints related to JPEX, involving about HK$34 million in virtual assets. Victims said they were unable to withdraw their investments without exorbitant fees – as much as 99 per cent of their principle amount – even before the platform halted transactions.
Complaints flooded in on 18th September 2023, with 1,408 cases tallied at 2pm while the amount involved shot to HK$1 billion, the police said.
Source : South China Morning Post
Comments