JPEX cryptocurrency exchange named in 83 complaints to Hong Kong police over virtual assets worth HK$34 million

Commissioner of Police Raymond Siu urges other victims to come forward, days after securities regulator names and shames JPEX for dubious practices
Some platform users have also complained online of difficulties withdrawing Tether tokens, or USDT, with larger sums being held as ‘processing fees’

Crime in Hong Kong

Kahon Chan

Published: 5:17pm, 16 Sep 2023

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Hong Kong police have received at least 83 complaints involving the JPEX cryptocurrency exchange and virtual assets worth about HK$34 million (US$4.3 million) after the city’s securities watchdog called out the unregulated firm for dubious tactics.

Commissioner of Police Raymond Siu Chak-yee on Saturday also said the Securities and Futures Commission (SFC) had filed a report with the force two days ago over suspected fraud, adding that the commercial crime bureau was investigating.

He said police had received 83 complaints as of 3pm on Friday as the force had set up a dedicated 24-hour hotline at 2860 5012.

Commissioner of Police Raymond Siu has urged more victims to come forward. Photo: Edmond So

“I appeal to people who have related questions about the case or want to report a crime to contact us through the hotline or the electronic report form,” Siu said.

On Wednesday, the commission issued a warning to potential investors that JPEX had not filed any licence applications, calling for the public to be wary of any opportunities that seemed “too good to be true”.

The watchdog said the trading platform had made false claims that it had obtained licences from overseas regulators, as well as offering high returns on savings products.

JPEX also relied on misleading statements made by social media influencers “who are often paid promoters”, the commission added.

The securities regulator has included two JPEX-affiliated companies on its alert list since July last year, indicating the platform was seeking Hong Kong investors without a proper licence.

Crypto exchange JPEX is misleading investors, Hong Kong’s SFC says

Some users of the exchange have reported issues when withdrawing virtual assets from their online accounts in the days after the regulator issued the warning.

One user posted a screenshot in a Telegram group for JPEX-related complaints that showed a request to withdraw 1,000 Tether tokens, or USDT, on Saturday afternoon had only yielded 25, with the rest withheld as a “processing fee”.

One Tether token is worth about US$1.

The administrator of the group asked to only be identified by his username, @CryptoTraderL, claiming past threats of harassment, and told the Post on Saturday it had received about 200 “serious” complaints involving more than US$10 million in virtual assets.

“But I believe it’s only the tip of the iceberg because, according to blockchain transaction records, JPEX has more than 30,000 users involving more than US$300 million,” he said.

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He accused the platform of selling tokens to a growing number of users despite having a limited pool of USDT and said unfamiliar investors could be vulnerable to the buzz generated by social media influencers.

The cryptocurrency exchange established a presence in Hong Kong more than two years ago and ran aggressive promotion campaigns that included adverts at MTR stations in Central, Mong Kok, Tsim Sha Tsui and Causeway Bay.

Actor-singer Julian Cheung Chi-lam has featured on JPEX publicity materials as a brand ambassador since last August. His agent told local media they had never agreed to run the campaign before JPEX secured a licence.

JPEX also ran a promotion drive in Taiwan earlier this year, roping in entertainer Nine Chen as a spokesman and publicising its decision to lease an office building in downtown Taipei.

Chen has since told local media that his contract with JPEX ended in late July.

Technology lawyer Joshua Chu Kiu-wah, also the chief risk officer of blockchain firm XBE, said the JPEX saga underscored the need for enhanced user education and comprehensive regulatory oversight of the sector. The regulators also had to stay ahead in the use of technology.

“The successful implementation of advanced technologies by government agencies will be essential in enhancing regulatory capabilities and addressing challenges in the digital jurisdiction, especially in the context of detecting anomalies like JPEX,” he said.

He advised users to do their homework before engaging any virtual asset trading platform, including evaluating adverts to avoid misleading claims.

In a statement on Friday, JPEX said a newly formed project team was still constructing a response strategy and “we believe that the platform will not collapse”. It also shut down its game lobby features from midnight on Friday.

The identities and locations of JPEX’s owners remain unclear due to the company’s opaque corporate set-up.