The JPEX fraud saga began last week when the SFC revealed it had received 1,400 complaints against the exchange regarding fraud, withdrawal freeze and declining wallet balances.
Hong Kong regulators are looking to tighten the noose around the crypto market after the arrest of six individuals following allegations of fraud around an unlicensed crypto exchange called JPEX.
John Lee Ka-chiu, the chief executive of Hong Kong, told reporters on Sept. 19 that the government would increase its efforts to inform investors and remind them to only utilise platforms that have been granted SFC licences, reported AP News.
The JPEX issue came to the fore last week when the country’s Securities and Futures Commission (SFC) notified the public that they had received over 1000 complaints related to the unregistered crypto exchange platforms with customers complaining about collectively losing over $128 million (1 billion Hong Kong won) due to the fraudulent exchange.
The SFC in its warning noted that JPEX was actively promoting the platform’s services and products to the Hong Kong public through online celebrities and over-the-counter money changers.
As the problems with JPEX became public with the warning from the SFC, many users of the platform found themselves unable to withdraw their funds while others complained about reduced wallet balances. After the Hong Kong watchdog’s warning to the exchange, the platform reportedly increased its withdrawal fee to $1,0000 to discourage users from withdrawing their assets.
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The crypto exchange later blamed third-party market makers for the ongoing liquidity crisis on the platform that resulted in the hike of the withdrawal fee. The Hong Kong police also arrested influencer Joseph Lam (Lin Zuo) for his association with crypto exchange JPEX.
Hong Kong established itself as a growing crypto hub in 2023 working on various pro-crypto legislation and opening the crypto trading market for retail customers. However, unlicensed crypto platforms like JPEX have managed to fool many users in the country due to a lack of knowledge and awareness. The regulatory body is now working to educate people on using only licensed platforms for their crypto trading activities.
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