The JPEX fraud case began last week when the SFC received 1,400 complaints. People were concerned about possible cheating, inability to withdraw their money, and decreasing digital wallet balances.
Hong Kong regulators are getting stricter with cryptocurrency trading after six individuals were arrested in connection with an unlicensed crypto exchange called JPEX.
The Chief Executive of Hong Kong, John Lee Ka-chiu, stated on September 19 that the government will work harder to inform investors. They want people to use platforms that have received licenses from the Securities and Futures Commission (SFC).
The issue with JPEX became public when the SFC received more than 1,000 complaints about unregistered crypto exchanges. Customers claimed to have lost over $128 million (1 billion Hong Kong dollars) because of this fraudulent exchange.
The SFC warned that JPEX was actively promoting its services to the Hong Kong public through online celebrities and money changers.
After the SFC’s warning, many JPEX users had trouble withdrawing their money, and some saw their digital wallet balances decrease. The exchange also raised its withdrawal fee to $10,000 to discourage users from taking out their assets.
Crypto Exchange Blames Third-Party Market Makers for Liquidity Crisis
The crypto exchange later pointed fingers at third-party market makers for the ongoing liquidity troubles on their platform, which led to the increase in withdrawal fees.
The Hong Kong police arrested influencer Joseph Lam (Lin Zuo) for his association with the crypto exchange JPEX.
Hong Kong’s Growing Crypto Hub Faces Challenges
Hong Kong has been emerging as a crypto hub in 2023, working on pro-crypto laws and opening the crypto market to regular customers. However, unlicensed platforms like JPEX have deceived many users due to a lack of knowledge. Regulators are now focusing on educating people about using licensed platforms for their crypto trading.
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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