Hong Kong Arrests Eight In Connection With Suspected $152 Million Fraud At JPEX Crypto Exchange

Updated: 19 September 2023

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Hong Kong police arrested eight people in connection with a suspected $152 million fraud at beleaguered crypto exchange JPEX.

The police have received 1,641 complaints from people who are unable to recover money from JPEX, according to a Sept. 19 press briefing. Twenty locations were raided across the city, including offices and over-the-counter (OTC) shops, with cash, jewellery, luxury handbags, computers, and phones worth about HK$8 million seized, the police said.

Things began to unravel for JPEX on Friday, when Hong Kong’s Securities and Futures Exchange Commission (SFC) released a name-and-shame statement that said the exchange is not licenced to operate in Hong Kong. It also warned that JPEX had provided false information about obtaining licenses from foreign regulators, promoted business partnerships that never materialized, and was offering suspiciously high returns for its interest-bearing products.

Hong Kong police held a press conference on Tuesday afternoon after four men and four women were arrested on suspicion of fraud linked to the unlicensed cryptocurrency exchange platform JPEX.

Photos: Kyle Lam/HKFP. pic.twitter.com/61lomKWV87

— Hong Kong Free Press HKFP (@hkfp) September 19, 2023

The warning triggered a liquidity squeeze as JPEX market makers froze its funds, the exchange said in a blog post.

”They demanded more information from the platform for negotiation, restricting our liquidity and significantly increasing our daily operating costs, leading to operational difficulties,” it said.

JPEX suspended the operations of its Earn program and subsequently hiked its withdrawal fees with some JPEX users saying that the exchange charged a withdrawal fee of 999 USDT for a maximum amount of 1,000 USDT. JPEX promised to “gradually adjust the withdrawal fees back to normal levels,” adding that it would need to restructure to maintain stable operations.

Among those arrested were social media personalities Chan Hoi-yee and Joseph Lam Chok, who actively promoted JPEX and owned and operated OTC cryptocurrency exchange shops in Hong Kong.

Police raided Lam’s office and OTC store in Central Hong Kong on Monday, and took away cash and a laptop computer. Chan’s office and OTC store in Tsim Sha Tsui were also raided, along with Coingaroo and Coiner OTC branches, local media said.

JPEX Under Scrutiny

JPEX has been on the SFC’s investor alert list since July 2022, when it urged people to be ”extremely careful if they plan to invest on unregulated platforms.”

Hong Kong's Securities and Futures Commission (SFC) warns about JPEX cryptocurrency exchange. Concerns raised over lack of registration, aggressive marketing, and high-risk earnings promised to investors.

— Bitx (@BreakinBitx) September 15, 2023

JPEX claims on its website that its operating headquarters is located in Dubai and under the supervision of the Virtual Assets Regulatory Authority of Dubai (VARA), the SFC says JPEX is not on the public list of licensed virtual assets service providers published by VARA.

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