Hong Kong JPEX Cryptocurrency Scandal Spurs Licensing Scrutiny

Hong Kong Cryptocurrency

The CEO advises investors to stick with already-approved platforms, as they have proper safeguards in place. He emphasizes that the government’s aim is to make sure that information shared is transparent.

Hong Kong’s securities regulator will now reveal pending license applications from virtual trading platforms, a move aimed at providing better information to investors following the JPEX scandal.

The CEO, John Lee Ka-chiu, discussed this development in light of the city’s largest local fraud case, emphasizing the Securities and Futures Commission’s (SFC) change in approach to identifying cryptocurrency firms seeking regulatory approval for trading services.

The JPEX incident resulted in alleged losses of HK$1.49 billion (US$190.6 million) in virtual assets, and the SFC faced criticism for a perceived slow response despite earlier complaints against the platform.

The SFC has received license applications from four other companies: HKVAX, HKBitEx, Hong Kong BGE Limited, and Victory Fintech Company Limited.

Chief Executive Lee emphasized the government’s commitment to ensuring transparent and clear information for virtual asset trading. He explained that providing clear information would help investors make informed decisions about their investments. However, he also stressed that the safest way for investors to protect their interests is to use platforms that have obtained licenses. Licensed platforms are subject to proper regulation, risk controls, and standards.

Lee also called on individuals involved in the cryptocurrency business to collaborate with the government in educating investors about cryptocurrency products and risk assessment.

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Centralized cryptocurrency exchanges serving Hong Kong investors have a one-year grace period starting from June 1 to comply with the new regulatory framework or cease operations in the city.

The Securities and Futures Commission (SFC) initially resisted disclosing pending license applications, fearing that it might create a false sense of security, as not all applicants would qualify. Critics argued that this grace period, combined with the lack of information about applicants, allowed dubious operations like JPEX to thrive.

JPEX, which has been under scrutiny, has falsely claimed to be seeking a license, even though it hasn’t submitted an application. The platform has imposed high withdrawal fees on customers and remained defiant despite police operations targeting its local changer shops and influencers.

Authorities have arrested 11 individuals connected to the platform, freezing HK$15 million in bank accounts and taking possession of three properties valued at HK$44 million.

Several exchanges are pursuing licenses in Hong Kong but aren’t part of the SFC’s list of four approved firms. OKX, for example, has stated it’s in the final stages of preparing its application.

Hong Kong currently has only two licensed platforms for retail cryptocurrency trading services: HashKey and OSL.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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  • Asad

    Asad is a dynamic and talented cryptocurrency content author who brings a wealth of knowledge and enthusiasm to every article. With a deep understanding of blockchain technology and a passion for digital assets, Asad's writing is both informative and engaging.

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