Hong Kong police arrest 18 in $1.5B billion JPEX fraud

The investigation into the JPEX crypto exchange scandal continues to unfold as Hong Kong and Macau police arrest four more individuals. These arrests, which include individuals considered “relatively close to the core” of the scandal, bring the total number of detentions to 18.

During the press conference, Commissioner of Police Tang Ping-keung disclosed that the police confiscated over 8 million Hong Kong dollars ($1 million) in cash. Additionally, assets totaling 77 million HK$ ($9.8 million), including real estate and digital currency, were seized as part of the investigation.

Authorities are actively pursuing other fugitives in connection with the case. The arrested individuals were accused of employing deceptive advertising and illegal methods to entice victims into opening accounts and investing on the platform. Interestingly, one suspect was reportedly caught attempting to destroy documents using paper shredders and bleach in an apartment bathtub to conceal evidence in this complex investigation.

Earlier this month, the city’s Securities and Futures Commission (SFC) surprisingly named JPEX in a public advisory, accusing it of suspicious practices and misleading promotions. This led to a series of arrests, including prominent influencers associated with the platform. Subsequently, over-the-counter exchanges linked to JPEX were raided, and the company’s website was blocked in Hong Kong.

The fallout from these events has been significant, with more than HKD 1.4 billion (approximately $180 million) in virtual assets believed to have gone missing. This situation has been described as one of the city’s largest financial fraud cases in recent years, causing alarm among local investors.

This case comes at a sensitive time for Hong Kong, which is positioning itself as a global hub for virtual assets. The city recently allowed retail investors to legally trade cryptocurrencies on licensed platforms. As such, it serves as a critical test of how regulators and authorities plan to handle the regulation and enforcement of the cryptocurrency sector.

JPEX, one of the most high-profile cryptocurrency players in Hong Kong, has been active since 2020 and has aggressively marketed its services. Local influencers and celebrities, including artist Julian Cheung, have endorsed the exchange.

While JPEX claims it applied for a license to operate as a regulated platform, the SFC, for its part, refuted the news ad said it has been probing the platform on suspicion of fraud since 2022. In response to critics, the regulator will publish lists of licensed virtual assets trading platforms (VATPs), those in the application process, as well as those that are no longer operational. Additionally, the regulator will maintain a list of “suspicious VATPs” on its website.

The SFC received over 2050 complaints against JPEX, with losses totaling more than 1.5 billion Hong Kong dollars. Additionally, some investors complained of being unable to withdraw their assets from JPEX accounts and noted discrepancies in their account balances, including reductions and alterations.