Four men and two women have been arrested on suspicion of conspiracy to commit fraud linked to the unlicensed cryptocurrency exchange platform JPEX, after Hong Kong police received reports from 1,480 people related to the case.
The case under investigation involved over HK$1 billion, the police told HKFP on Monday.
Among those arrested were influencer and insurance agent Joseph Lam and investment YouTuber Chan Yee, also known as Chan Hoi-yee, according to photographs published in local media. Both ran over-the-counter (OTC) crypto exchange stores in Hong Kong. Lam said on social media in July that he had applied to join JPEX as a partner, later confirming that he was a partner to Ming Pao.
Local media reported that police searched Lam’s office and OTC store in Central and Chan’s office and OTC store in Tsim Sha Tsui on Monday. Branches of OTC stores Coingaroo and Coiner were also searched.
Hong Kong introduced a new licensing regime for virtual asset trading providers on June 1, with market watchdog the Securities and Futures Commission (SFC) providing operators that had a “meaningful and substantial presence” before that date a one-year transition period to apply for licensing or close down.
JPEX, a new platform, was reportedly promoting its products and operating in Hong Kong without having applied for licensing.
In July, Lam held several lectures on investment and recommended that audience members invest via JPEX, encouraging people to join the platform “before full regulation and licensing.” Ming Pao also reported that many users encountered difficulties in withdrawing assets from JPEX.
SFC said in a bilingual statement last Wednesday that authorities were aware that JPEX had been “actively promoting” its products through influencers.
“The SFC wishes to make it clear that no entity in the JPEX group is licensed by the SFC or has applied to the SFC for a licence to operate a VATP in Hong Kong.”
The watchdog also said it had received complaints from retail investors who were unable to withdraw virtual assets from their JPEX accounts, or had found their account balances “having been reduced and altered.”
The SFC then transferred the case to the police for further investigation.
JPEX froze transactions on Monday, saying in a statement that this move was due to “third-party market makers” restricting liquidity. It added that JPEX was trying “to resolve the liquidity shortage.”
“During this period, our dedicated withdrawal team responsible for handling emergency withdrawal requests will continue to prioritize users’ needs,” the company said.
Affected users have formed online support groups, and lawmaker and businessmen Johnny Ng held a press conference with two people impacted by the case on Monday.
Ng said he had received more than 30 calls for assistance linked to JPEX, involving HK$100 million.
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