Amid JPEX fallout, Hong Kong’s John Lee warns investors to only trade on regulated virtual asset platforms

Among those detained are YouTuber Chan Wing-yee and social media influencer Joseph Lam Chok, both of whom have set up cash-for-crypto shops in Hong Kong. The force has also targeted other over-the-counter cryptocurrency changers, including Coingaroo.

In developing the virtual assets market in Hong Kong, Lee said the government would ensure there was effective regulation and transparency in the release of information.

Lee said authorities would conduct “more public education for investors” on the operation modes of virtual asset platforms and how the regulatory regime would ensure sufficient protection for users.

Hong Kong arrests 6 people in fraud investigations linked to JPEX

Lawmaker Johnny Ng Kit-chong said that the rise in virtual trading and the use of digital currencies over the years had brought more than a hundred platform operators to the city, attracting customers with promises of high returns.

“Hongkongers need to identify whether the company they are investing in are licensed or not. Otherwise, they are exposed to a great underlying risk,” he told a radio programme.

Ng, who is also an entrepreneur in the technology industry, urged the SFC to make public information concerning both licensed and unlicensed operators, as some companies had used influencers to fool investors into thinking the businesses were legitimate.

Associate Professor Billy Mak, of Baptist University’s department of accountancy, economics and finance, said the government’s oversight regime for companies trading in virtual assets was not “ideal”, noting only two main operators were licensed and more than a hundred traders were unregulated.

The academic called on authorities to monitor such platforms more closely and increase penalties to deter further cases of malpractice, as well as keeping track of how unlicensed traders operated.

“Authorities should learn a lesson and strengthen their regulations for the platforms, such as checking if there are any potential risks exposed in the operating platforms,” Mak said.

JPEX-Crypto Platform to suspend trades on Monday amid Hong Kong probe

JPEX, which claimed to operate offices and units in Dubai, Australia and the United States, was first placed on SFC’s alert list in July last year, months after an extensive advertising campaign by the firm in the city’s busiest MTR stations as well as on billboards outside harbour-crossing tunnels.

The securities regulator issued a warning against JPEX last Wednesday for “misleading investors” while continuing to operate without applying for a licence.

SFC in particular singled out influencers and cash-for-crypto changers in its warning against active promotion of JPEX products and services, some of whom the watchdog said had made “false or misleading statements” to suggest JPEX had applied for a trading licence for cryptocurrency deals.

JPEX cryptocurrency exchange named in 83 complaints to Hong Kong police

The platform halted all cryptocurrency transactions from Monday. Some users of the exchange had already reported issues such as high processing fees when withdrawing virtual assets from their online accounts in the days after the regulator sounded the warning.

While insisting it would still continue to operate, JPEX on Monday insisted it had always intended to comply with Hong Kong’s cryptocurrency regulatory system before the end of a one-year grace period, accusing the city’s regulator of “unfair treatment”.

“JPEX expresses extreme disappointment at the SFC’s unfair practices that disrupt market order … Their biased stance also does not fulfil their role as a fair and impartial regulator, let alone protect the multitude of investors in Hong Kong,” the firm said in a statement.

Additional reporting by Harvey Kong